Was there ever a point he could have just contended himself with a generous salary and lived off the investors foolish investment in crypto?
Or was the entire enterprise criminal from the very beginning?
As a layman looking in it’s difficult to tell whether the crime was stealing from investors or just getting them to invest in a meritless system.
My understanding was that it was a real and legitimate trading platform had it not been for trading using customer deposits.
I don’t know what their business’ profit margin was, but I suspect that the amount of money they were making legitimately, such as from trading fees and margin interest, seemed like peanuts compared to their total customer deposits and how quickly the value was increasing as the price of crypto increased.
During the run up, it was almost impossible to lose money investing in crypto, everyone doing it thought they were a trading genius, so it was pretty tempting. I’m sure SBF and others there had been doing it and thought they could be billionaires if only they had the seed money. I think it started slowly at first, borrowing customer money to invest, try to make a good return, and the customer never knows.
If crypto had gone up forever, this plan may have worked. As crypto started going down, they had to invest more and more to try to earn back losses. They had to increase the credit limit of Alameda research multiple times before maxing it out.
I picture that like a gambling addict betting their house in order to win everything back. If they keep doubling their bet, eventually they’ll win and be in the green again, right?!
BBC did a pretty decent panorama episode on it a while back.
Seems like they were onto a genuine good thing as a crypto trading paltofrm but either got greedy, stupid or both.
This is the best summary I could come up with:
Facing cross-examination at his criminal fraud trial yesterday, Sam Bankman-Fried repeatedly testified that he doesn’t remember details about what he did and said while running cryptocurrency exchange FTX.
Sassoon “grilled Mr. Bankman-Fried about the inconsistencies between his public statements and how he ran his crypto empire before it collapsed spectacularly in November,” a New York Times article said.
But Sassoon “presented jurors with a mountain of tweets, emails, and podcast clips revealing that the MIT grad did in fact say dozens of things he claimed not to have recalled,” the article said.
“After much pressing, Bankman-Fried eventually confirmed one aspect of prosecutors’ sprawling fraud and conspiracy case—that his hedge fund Alameda, in an unheard-of arrangement, could pull out billions of dollars it did not own from FTX using a near-unlimited line of credit,” the New York Post wrote.
Under cross-examination yesterday, Bankman-Fried said he didn’t remember statements he made publicly about the ties between FTX and Alameda, a Wall Street Journal article said:
Sassoon pressed Bankman-Fried on the relationship between the two entities, including what prosecutors allege were Alameda’s secret and unique privileges to borrow virtually unlimited sums from FTX.
The original article contains 573 words, the summary contains 190 words. Saved 67%. I’m a bot and I’m open source!