re: Crypto exchange FTX declares bankruptcy

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Someone is going to jail

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Rumor is that he pledged billions to the DNC and only delivered 10's of millions and this is the result of falling short

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I hope the MLB umpires got paid.

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I found it really depressing when the World Series was sponsored by FTX and some (other) gambling app. People are such suckers, and I know it sounds "left wing," but they ought to be protected from rapacious and addictive phone apps. There is absolutely nothing legitimate that FTX contributes to the economy, and precious little that gambling contributes.

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Uh no one did see this coming.

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*on Reddit

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Didn't someone back out on buying them yesterday after seeing their financials?

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Their competitor Binance said they would, reviewed the financials very briefly, and hit road immediately.

The wonder kid is going to jail on this one. He screwed too many out of too much and the Dem overlords probably can’t or won’t save him. He doesn’t have gobs of money to give them anymore.

Sam is going to prison

People want currency with no accountability

They’re getting it

We don't claim anyone with a hyphenated last name.

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No one is going to jail.

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Sam is going to jail. He has embarrassed politicians. They don't take that sitting down.

To further add to the political complexity of everything, the dad of the 28 year old CEO of Alameda Research was the boss of Gensler at MIT. This kid was illegally using billions in client funds to yield farm defi shitcoins. fricking unbelievable.

And just for shits and giggles because this is the OT and we have rules, SBF and the Alameda CEO lived in a condo in the Bahamas with 8-9 other employees, and SBF, a billionaire (at least on paper) who could have almost any woman in the world, was sleeping with this girl.

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So is all crypto just a middleman or just this one?

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Not all crypto involves a middleman. In fact, many of the more honest, helpful people in the crypto space who want crypto to become legitimate strongly advise people to pull their bitcoin and other assets out of exchanges and hold them in cold storage. As they put it, roughly:
if you don't actually possess it, you don't own it. And a good number of them prefer DeFi solutions over CeFi.

In the crypto space, DeFi (decentralized finance) is when there isn't one person or group who runs the system. Instead, there's a network of people/groups/nodes that approve/validate transactions with shared responsibility. While this sounds superficially chaotic, it seems to work fine and is regarded as secure. (Money board crypto guys can answer the hows and whys of this better than me.)

In contrast, CeFi (centralized finance) is the term used to described exchanges like FTX where the system is centrally controlled by one man or group-- Sam Bankman Fried (aka SBF) in this case. These type systems can be easier to use, but you have to trust the owner.

In terms of what's happening in the current FTX/SBF saga, investors trusted FTX to maintain custody of their assets, and they didn't. Instead, when people invested BTC, ETH or whatever crypto they had into FTX, FTX encouraged them to swap it for FTT (FTX's own internal crypto token... think of it as digital casino chips/credits... which were promoted as having lower trading fees and which would earn 'yield' (interest)). Then FTX/SBF illegally loaned the real assets they should've maintained in custody to Alameda (a separate investment company also owned by the same SBF guy), where he and his inner circle allegedly made several risky investments (read: they gambled the real assets away).

SBF was already pissing off a lot of the crypto community by meeting with Gary Gensler (SEC) and helping frame legislation which would've hampered legit DeFi solutions, and given more tacit power to SBF/FTX/CeFi, and some people started closing their accounts. Then someone leaked either the FTX or Alameda balance sheet and when it was found that a disproportionate amount of holdings was their own FTT token, investors became alarmed & started withdrawing assets... which became a severe bank run that caused a liquidity crunch (since assets were illegally moved and/or lost) and not available for withdrawals. The value of everything dropped and now FTX is facing bankruptcy and may cause a few other large players into similar distress.

That's a very brief summary, and doesn't include the Binance angle. Seems like definite securities fraud for moving customer assets that should've been held in reserve. Also, it can be argued that their own FTT token was essentially a ponzi coin used to suck in bitcoin and other legit assets.

This will likely cause a lot of damage to the crypto community's reputation for the forseeable future and set back the progress they were making with mainstream acceptance. And it has given regulators ammo to crack down. Imho, this is regrettable. Bitcoin (in particlar compared to many shitcoins), crypto, & DeFi were made to help regular people break free from centralized, large banks that tend to screw over regular people. What happened at FTX has nothing to do with bitcoin itself. It was just an opportunistic thief who was stealing client funds, and trying to screw over BTC & DeFi while propping up his own shitcoin. Ironically, I think this debacle strengthens the case for BTC and actual DeFi since it once again proves centralized control by a person/small group is prone to abuse and fraud (as with Madoff, Lehman, Bear Stearns, etc.).

On a side note, I think the SBF guy's mom runs one of the large Democrat voting orgs, maybe "True the Vote"? And SBF himself spent tens of millions (I think 2nd only to Soros on the (D) side) in 2022 funding Democrat politicians, and was heavily connected. Make of that what you will.

edit to add (due to long post/distracted typing)... I see others already covered the political part, which I think is potentially relevant to SBF's meteoric rise. In any case, people had been increasingly becoming suspicious of him as a bad actor in the space.