Are we allowed to talk about Bitcoin?

Susan Webber (aka Yves Smith) weighs in on how nobody is asking the right questions and nailing this guy to the wall on what he did with several billion dollars that Alameda had "loaned" him. He can't babble or BS his way through that question, because he 1) says he has onbly $100,000 in the bank, so where die the rest go? and 2) he can't pawn it off on anyone else. It was money he was controlling.

Earth to Reporters: Why Is No One Asking SFB What Happened to the $3.3 Billion He Borrowed? | naked capitalism

 

I'm sure it will be fine (did I do that correctly, @Azrael ?).

https://www.cnbc.com/2022/12/09/cry...cy-offshore-holdings-client-money-monaco.html

 

Sam Bankman-Fried, FTX's founder, is arrested in the Bahamas | CNN Business

They arrested Sam Bankman-Fried in the Bahamas, pending extradition.

 

Why would anyone read the SEC's civil complaint to try to gain any clarity?

Gary Gensler is an opportunistic shit. And the SEC is useless by its very nature. The SEC can not protect people from themselves. And now, in a power grab to make themselves relevant, they not only won't protect people from themselves, they will REGULATETM things to restrict choices, drive up costs for everyone and create all kinds of unexpected outcomes that they will then use as the rationale to regulate things even more.

On FTX, it won't be that difficult to figure out forensically. In fact, we already know what happened in broad strokes, now it is a matter of some specifics. You are going to find that a brokerage operation (FTX) and a trading firm (Alameda) were intermingled. They were being run by a bunch of Adderall-adled, very unsophisticated kids out of a house in the Bahamas. In a cheap-money environment, in which their 20-something year old sensibilities had been taught that you could use leverage to make a fortune in assets that will only continue to bubble up forever in value, their business-model, if you can call it that, made sense.

In a rising rate environment, where money was being made more expensive for the first time in decades (because of the consumer price inflation the central bank responsible for all of this unleashed, and now feels it needs to make overtures to deal with), that leveraged position unwound on them. The details won't be that complicated. They were taking deposits, and essentially used their customers assets as collateral to trade on margin via Alameda. They were leveraged to the hilt. Their big bet was on a cryptocurrency that they created themselves, called FTT, which they were able to pump up in value using a variety of schemes (that weren't necessarily illegal), such as paying others with it, and then marking it to market at the value they attached to their payment, and borrowing against their own holdings at that value (with others WILLINGLY giving them that margin). You'll need to remember that with all of the handwringing, Monday Morning Quarterbacking, and calls for regulation, nobody forced anyone to capitalize these guys or loan them money. ... unless you want to tell me (and I will be sympathetic) that the Federal Reserve essentially forced people into batshit crazy risk because they have had a policy in place since the financial crisis of propping up way too much debt (a situation of their making) with exponentially more debt, and that required robbing savers (stealing their yield and forcing them to take increasingly crazier risks to try to collect the risk-free yield that was being stolen from them) to reward debtors.

All of what FTX / Alameda was doing was dubious, and obviously going to collapse without money being made so cheap forever that people could keep rolling over bigger and bigger loads of debt to keep leveraged positions from collapsing. But it wasn't a "ponzi scheme." If anyone has been running the Ponzi scheme it has been the Federal Reserve.

If there was actual illegality, it will revolve around what happened when their leveraged position unwound, and it will be two things at issue: 1) Were they required to keep customer accounts segregated (by law (and it is murky with a crypto broker) or by their own customer agreements), because once Alameda was at risk of going bust, it appears they then raided their customer accounts to try to "fix" their mess (which with the amount of leverage they were employing, and just how worthless FTT really was, was like using an $8 billion squirt gun to try to contain an $800 billion fire). 2) When SBF realized that it was going to collapse, did he transfer hundreds of millions or billions of dollars to himself or people close to him.