[HN Gopher] FTX bankruptcy examiner's report [pdf]
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FTX bankruptcy examiner's report [pdf]
Author : wmf
Score : 72 points
Date : 2024-05-23 19:38 UTC (3 hours ago)
(HTM) web link (restructuring.ra.kroll.com)
(TXT) w3m dump (restructuring.ra.kroll.com)
| sram1337 wrote:
| Here are some juicy insights extracted from the document related
| to the FTX Group:
|
| Buy and Burn Program: This program, likened to a share buyback,
| was designed to give value to FTT token holders by using part of
| FTX's revenue to buy FTT tokens. However, investigations revealed
| that the program was likely a method to inflate the value of FTT,
| which was largely held by Alameda. The program used approximately
| $462 million of FTX's gross revenue to buy back tokens,
| significantly benefiting Alameda .
|
| Misrepresentation of FTX.US's Financial Health: Despite claims by
| Bankman-Fried that FTX.US was solvent, investigations revealed
| substantial errors in the financial documentation. Bankman-
| Fried's assertions were contradicted by evidence showing that
| funds were improperly transferred between entities to cover
| financial shortfalls, indicating deeper liquidity issues than
| publicly acknowledged .
|
| Misconduct by Executives: Investigations into FTX Group
| executives, such as Ryan Salame and others, revealed widespread
| misuse of company assets for personal gain. This included buying
| real estate, private jets, and making political contributions.
| Additionally, there were instances of backdated agreements and
| misleading banks about the nature of transactions .
|
| FTX Group's Legal Maneuverings: The FTX Group's selection of law
| firms was disorganized, leading to duplicated efforts and fees
| paid without meaningful services rendered. This chaos extended to
| the use of ephemeral messaging apps like Signal by Law Firm-1,
| which hindered the recovery of full communication records .
|
| Venture Investments and Related Parties: The FTX Group's venture
| investments were marked by a lack of due diligence, rapid
| decision-making, and unsupported valuations. Many investments
| involved entities tied to senior FTX executives, further
| complicating the financial landscape and recovery efforts .
|
| Political and Charitable Contributions: Joseph Bankman and
| Barbara Fried were implicated in directing funds to personal and
| political causes, including donations to Stanford University to
| curry favor and large contributions to the Mind the Gap political
| action committee. This misuse of funds for personal and political
| gain was part of broader efforts to maintain influence and cover
| up the company's financial misdeeds .
|
| These insights highlight significant misconduct and financial
| manipulation within the FTX Group, driven by a combination of
| strategic misrepresentation, personal enrichment, and chaotic
| internal management.
| woah wrote:
| > Venture Investments and Related Parties: The FTX Group's
| venture investments were marked by a lack of due diligence,
| rapid decision-making, and unsupported valuations. Many
| investments involved entities tied to senior FTX executives,
| further complicating the financial landscape and recovery
| efforts .
|
| Seriously asking- how does this differ from any other VC fund?
| itsoktocry wrote:
| There's a lot of sketchy finance that nobody cares
| about...until you lose a lot of other people's money.
| doctor_eval wrote:
| A VC fund is set up explicitly to operate this way. Investors
| know what they're getting into; investors are the customer
| and are aware of the risks. They know they're gambling.
|
| FTX was supposedly a safe place to exchange funds, the
| customers were uninformed as to the risks they were taking.
| In fact they were encouraged to believe the risks were low.
| They did not know they were gambling.
|
| It's really different.
| rybosworld wrote:
| The primary difference is that FTX was far more reckless than
| the typical VC.
| wmf wrote:
| Nah, the difference is that FTX was investing stolen money.
| No one would care otherwise.
| iamacyborg wrote:
| I'd be amused if FTX made better investments than the average
| VC fund.
| refulgentis wrote:
| You're right, it doesn't: this isn't human insight, it is GPT
| spam
| refulgentis wrote:
| GPT spam
| bijection wrote:
| If you generated this with an LLM, you might consider labeling
| it more clearly. Wrote copy-and-pasting of llm outputs seems
| contrary to the 'thoughtful and substantive' north star of
| hacker news comments. And just in case I'm wrong, apologies if
| this was your own work - it would be a good bit of irony if I
| turned out to be the one hallucinating.
| chollida1 wrote:
| Pretty damning in this report is the section about SBF admitting
| that Alameda's NAV is very dependent on how you account for FTT
| way back in 2019.
|
| Also interesting that they apparently loaned money to Deltec bank
| to help shore up its balance sheet. Deltec being Tether's bank at
| the time.
| ai_what wrote:
| The irony of his mom being on the Board of Advisors of Stanford
| University's Ethics is astounding.
|
| Page 177:
|
| Joseph Bankman, Bankman-Fried's father, is a tenured Stanford Law
| School professor who served as an officer, director, manager
| and/or pro bono counsel to a number of FTX Group entities.
| Barbara Fried, Bankman-Fried's mother, is a Professor Emerita of
| Stanford Law School. She served as a member of the Board of
| Advisors of Stanford University's Ethics.
|
| Or this part about this dad on page 183:
|
| And the Debtors allege that Joseph Bankman directed "donations of
| more than $5.5 million" to Stanford University in an attempt to
| "curry favor with and enrich his employer at the FTX Group's
| expense."
| jessriedel wrote:
| > The irony of his mom being on the Board of Advisors of
| Stanford University's Ethics is astounding.
|
| Your sentence was cut off? She is a member of the Board of
| Advisors to the Stanford Ethics in Society Program. That means
| she helps direct an academic program researching ethics, not
| that she enforces ethical rules within Stanford.
|
| Professional ethicists and moral philosophers do not, and
| generally do not claim to, act morally better than others.
| There profession is about researching the consistency and
| implications of moral rules.
|
| Judges are generally held to a higher standard than the general
| public, so I guess there is irony/hypocrisy when they commit a
| crime they have convicted others of. But that's not what Fried
| was doing.
| TheOtherHobbes wrote:
| Indeed. Academic ethics are more theoretical then practical.
| atherton33 wrote:
| Those who can, do. Those who can't, teach.
| soneca wrote:
| Considering all you said, I still consider it ironic that her
| son is so unethical
| dexwiz wrote:
| Is it ironic that someone specialized in ethics would have
| a son so adept in using them to his advantage? Seems like a
| natural conclusion to me.
|
| Effective altruism seems like a weaponization of morals to
| support wealth hoarding.
| yyyyybb wrote:
| If it's unethical to lose people money there'd be no
| Republican free. This is free speech please respond
| respectfully.
| georgeecollins wrote:
| >> Professional ethicists and moral philosophers do not, and
| generally do not claim to, act morally better than others.
|
| That is a little like saying people who teach music don't
| claim to play an instrument very well. Universities are full
| of professors who can't do the thing they teach about very
| well. But I think we should be skeptical of people who study
| a thing they can't practice.
| __loam wrote:
| You're being incredibly pedantic.
| paulpauper wrote:
| I am amazed at how fast the whole thing progressed, starting from
| the failure of FTX, to his arrest, the trial, etc. The Enron case
| took a decade
| pants2 wrote:
| To the >100% recovery for creditors!
| ForHackernews wrote:
| All those prudent Beanie Baby investments are paying off in a
| big way!
| hackernudes wrote:
| 100% of the USD value at time of bankruptcy.
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(page generated 2024-05-23 23:00 UTC)