[TacticalCoder]

> FTX actually had a solvency crisis, where he took deposits, put them in completely inappropriate investments (many of which are now worthless, all of which were speculative nonsense) and is now revealed to have done that.

Who was on the other side of these losing trades? People need to follow the money trail. Where did the money go?

There are people who called the Alameda / FTX scam from day one, before FTX was even created (Alameda already existed). Then there are others, like Marc Cohodes, who realized SBF / FTX was a fraud when they looked into it. It's these people we should listen to. They knew SBF was full of shit back then and he's still full of shit now.

I do not buy the "inappropriate investments" angle. To me it was defrauding both users and investors by any means possible and funneling the money into the Bahamian blackhole. While putting the blame on "leveraged trades without stop-losses gone wrong".

There are just way too many things that do not add up: SBF/FTX bought a bank which belonged to the owners of Deltec in the Bahamas (the bank behind the whole iFinex (tether+Bitfinex) fraud, except that one hasn't blown yet).

And the latest amazing development: the current Bahamas attorney general used to work for... Deltec.

There's only one thing to say: you cannot make that shit up.

I don't think any movie or book writer could ever come up with something that insane.

[RC_ITR]

I mean it's always easy to look for a conspiracy, but is it really so crazy to think that in a market that lost $2tn of "value" (I know crypto market caps are fake, but bear with me) that the most aggressive trader out there lost $8bn?

When I say investments, I don't mean VC investments, I mean Crypto trades.

[yakak]

The default in finance is conspiracy, this is why it has so much regulation. There's not a managed fund on earth that doesn't have a few fund managers that go around winking at 3rd parties and discussing ways to leverage their position and the limits of what they are allowed to accept.

[divbzero]

> Who was on the other side of these losing trades? People need to follow the money trail. Where did the money go?

There doesn’t have to be another side to the losses. If Alameda / FTX was holding assets that depreciate in value, they would book losses along with everyone else holding the same assets.

[kaashif]

The point they're making, I think, is that FTX bought various shitcoins from other people in exchange for USD. Value can disappear, but that's not what happened to the actual dollars they spent.

I'm not positive this whole thing was some kind of planned conspiracy, it just seems like idiocy and fraud catching up with them. I don't think any competent fraudster would get caught in such an embarrassing way.

[iudqnolq]

One theory is that it was their users. That is, Alameda lost huge amounts taking the other side of trades on FTX, and then FTX stole customer money and gave it to Alameda to compensate

[remarkEon]

Given this all happened on the "block chain", wouldn't it be possible to confirm this theory?

Btw, I find this explanation compelling - I'm not challenging it necessarily.

[cykros]

The block chain shows the bitcoin moving from one address to another. That's about it. It doesn't say what was exchanged for it, be that USD, FTT, or any other token, good, or service.

And those addresses are potentially pseudonymous to boot, at least if the BTC is withdrawn. If it ISN'T withdrawn, it's entirely plausible that the transactions took place off chain in the first place -- simply moving numbers around in an internal database while staying right in the same, FTX owned wallet. What you'd call in the trad fi space "holding assets in street name."

[medvezhenok]

Any time someone loses value, someone else gains it (in the short term), short of destruction of physical or knowledge capital (i.e. WWII bombing raids). We mark things in dollars but real value is measured in resources, physical capital, and intangible capital (rather than USD). Unless any of that was lost, the $ value losses just re-accrue to someone else instead.

This is different from imaginary value inflating and disappearing (i.e. tokens that never had liquidity - where mark to market never made sense, etc). In that case the whole thing is a mirage.

But if $8 billion dollars went into FTX, that money does not just "disappear" from depreciation - someone else's (or many people's) purchasing power increased in relative terms proportional to the losses suffered by FTX's creditors/depositors.

[SV_BubbleTime]

Incorrect.

Value can be created and sent back to ether. It’s not a zero sum closed system.

Let’s look at NFTs, they weren’t ever worth anything but some people thought they were, and counted them like they were, and convinced dumb people to pay for them at these prices, but it was all imaginary. The ones that never sold are just as worthless as the ones that did. The entire market collapsed, the “value” is really just gone, no one “has it”.

[helloworld11]

But no. Those NFTs never had anything but subjective bubble value to begin with and cost next to nothing to create too. The money transferred in exchange for changing ownership of them passed to other hands but didn't disappear. Its much more concrete value wasn't lost and nothing was destroyed in the process except the wispy perceived value of the digital NFT tokens that had (again) cost nothing to create in the first place.