[quickthrower2]

Hold your horses! What startups are lying about what they do? I don’t get the impression this is the case at all. MVP and move fast tactics are not fraud. Saying your SOC2 compliant or something when you are not probably is.

[halfmatthalfcat]

I know first hand of YC founders lying to (corporate) customers on their business size, revenue, etc in order to secure business. Is that fraud? At best its an unethical and dubious business practice.

[peter422]

It is only fraud if a jury of your peers would think it is fraud, which is probably a higher bar than you think.

Most of the fraud you are talking about also wouldn’t have the explicit benefit directly to the founders the way it did with FTX. SBF took money that wasn’t his and spent it on private planes and luxury apartments and hundred million dollar investments _in his name_.

The average startup founder who is trying to close a sale by exaggerating their business a little bit is not going to have that kind of clear gain, because most founders do not use their companies as piggy banks.

[halfmatthalfcat]

> Most of the fraud you are talking about also wouldn’t have the explicit benefit directly to the founders

The "Frank" startup that sold to JPMC because they lied about active users [1] directly contradicts your conclusion. It happens, probably more than we realize, and founders have an incentive to do it so they can reach a liquidity event to cash out.

[1] https://www.reuters.com/legal/former-executives-college-aid-...