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by kieselguhr_kid 1313 days ago
The idea behind the lack of regulation is that the impact is contained to the investors. It's obvious that in sufficiently large cases, that's not true. If these actors are able to do damage to entire sectors, they should have to do some minimum stuff: keep track of their money, have board meetings, submit to audits, etc.
1 comments
luckylion 1313 days ago
And they will ... it's just that they'll provide false numbers to audits, their board will be them and their friends, and they'll keep track of their money as it makes its way into their pockets.

I guess we need more blockchain! But what business will have 100% of their relationships, contracts and transactions publicly visible?

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kieselguhr_kid 1313 days ago
Have you worked with a reputable outside auditor? You don't just provide numbers and illustrate your methodology for obtaining them, you have to essentially reconstruct your entire revenue and finance system with them, provide ongoing random samplings, demonstrate the consistency of any calculations, and many, many other steps that I don't have time to illustrate. Companies couldn't just provide a false number, they'd have to construct a parallel revenue and finance system with false data. Do some companies still cheat and get away with it even after audits? Of course. But it's a major deterrent to this kind of behavior and a reputable auditor would have caught many of FTX's illegal activities much earlier.
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luckylion 1313 days ago
That depends on how much effort it is to fool the auditors. Will it cost you 5bn a year or 5mn? It worked for Wirecard, and as far as I understand, it wasn't super sophisticated either.
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PaulDavisThe1st 1313 days ago
Prosecution for factually lying (e.g. "providing false numbers to audits") is much easier than prosecution for intentionally lying (i.e. fraud).
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luckylion 1313 days ago
Do you believe they'll have trouble building a case against SBF & friends?

I took the comments to mean they wanted something to stop this from occurring, and I don't think that works well, criminals are going to do what criminals do. You can prosecute afterwards, but you can't easily stop them before they do it, see Theranos, WireCard, Nikola etc etc.

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