FTX Diverted $200 Million of Customer Money For Two Venture Deals, SEC Says (cnbc.com) 26
Of the billions of dollars in customer deposits that disappeared from FTX in a flash, $200 million was used to fund investments in two companies, according to the Securities and Exchange Commission, which charged founder Sam Bankman-Fried with "orchestrating a scheme to defraud equity investors." From a report: Through its FTX Ventures unit, the crypto firm in March invested $100 million in Dave, a fintech company that had gone public two months earlier through a special purpose acquisition company. At the time, the companies said they would "work together to expand the digital assets ecosystem."
The other deal the SEC appears to have referenced was a $100 million investment round in September for Mysten Labs, a Web3 company. In total, it was a $300 million funding round that valued Mysten at $2 billion and included participation from Coinbase Ventures, Binance Labs and Andreessen Horowitz's crypto fund.
The other deal the SEC appears to have referenced was a $100 million investment round in September for Mysten Labs, a Web3 company. In total, it was a $300 million funding round that valued Mysten at $2 billion and included participation from Coinbase Ventures, Binance Labs and Andreessen Horowitz's crypto fund.
The Same Circlefest of Perps (Score:3)
It's interesting to see how this whole ecosystem implodes as the perps all know the Ponzi music is going to stop and the number of chairs is dwindling by the hour.
Buckle up.
Re: (Score:2)
"I'm shocked, shocked, to find out that gambling is going on in here!"
"your winnings, sir."
"Thanks you."
Types of investment (Score:4, Interesting)
Obviously using customer funds to invest is very, very bad and likely to land SBF in jail.
But does the news they used it for VC funding as opposed to other kinds of investment make it worse?
Other than the fact it was a crappy investment (one of the companies lost 97% of its value) the one thing that comes to mind is a standard investment you sell anytime, but with a VC investment you're typically in it for a few years.
Perhaps this shows the borrowing of customer funds was not meant to be a short term loan but a long term strategy?
"likely to land SBF in jail" (Score:2)
Re: (Score:2)
Remember that his name is spelt Bankman-Fried, but it's pronounced Bankman-Freed.
Can we update that pronunciation to "Bankman-Fraud"?
Re: (Score:1)
Perhaps this shows the borrowing of customer funds was not meant to be a short term loan but a long term strategy?
Borrowing? You mean stealing, right?
That was the strategy...steal people's money. The "investments" and "campaign contributions" were nothing more than a way for him to (try to) launder cash.
Re: (Score:2)
Perhaps this shows the borrowing of customer funds was not meant to be a short term loan but a long term strategy?
Borrowing? You mean stealing, right?
That was the strategy...steal people's money. The "investments" and "campaign contributions" were nothing more than a way for him to (try to) launder cash.
Maybe, but if I'm his lawyer I'm saying he borrowed it. Ideally I'd claim it was a short-term emergency loan... but the fact that he tied the cash up in convertible debt makes that claim very hard to sell.
Re: (Score:1)
Well, I'm pretty sure he has a lot better lawyer (or team of lawyers) than you.
Taking even "short-term emergency loans" without permission is at the very least larceny (which is just a nice way to say stealing).
It hilarious how many people here try to whitewash what this dude was up to. He is maybe half a step above carder scum. Not that I feel sorry in the slightest for anyone who lost money to him, just because it involves cryptocurrency. Play stupid games; win stupid prizes.
Re: (Score:2)
Well, I'm pretty sure he has a lot better lawyer (or team of lawyers) than you.
Taking even "short-term emergency loans" without permission is at the very least larceny (which is just a nice way to say stealing).
It hilarious how many people here try to whitewash what this dude was up to. He is maybe half a step above carder scum. Not that I feel sorry in the slightest for anyone who lost money to him, just because it involves cryptocurrency. Play stupid games; win stupid prizes.
How am I whitewashing? I'm clearly stating that a) he's going to jail, and b) this latest revelation makes that aspect of his crimes look even worse.
As for the "loans", IANAL but intent always weighs into sentencing. Someone who illegally borrowed customer funds as an emergency loan with the clear intent of paying them back ASAP is going to get a lesser sentence than someone who illegally borrowed customer funds with the intent of paying them back several years later (if at all).
Re: (Score:1)
It's not just you, but since you asked, it's by the language and terms you use: "borrowing" "short-term emergency loans" "using customer funds to invest" "short term loan or long term strategy".
Why not just call it what it is? Stealing. If you don't like that particular word, there's tons of synonyms you could use...fraud, embezzlement, larceny, etc...I'm not a thesaurus, but damn....why not call a spade a spade?
Re: (Score:2)
It's not just you, but since you asked, it's by the language and terms you use: "borrowing" "short-term emergency loans" "using customer funds to invest" "short term loan or long term strategy".
Why not just call it what it is? Stealing. If you don't like that particular word, there's tons of synonyms you could use...fraud, embezzlement, larceny, etc...I'm not a thesaurus, but damn....why not call a spade a spade?
Borrowing customer funds is calling a spade a spade.
It's probably also fraud since they claimed they weren't doing that.
There might also be embezzlement, but I believe embezzlement would be something like false expense claims, or using company funds to buy stuff from another business of yours at an inflated cost.
The reason borrowing customer funds is a very serious crime is that they were deposited with the understanding that they would be kept secure, either just stored or used for very low risk investment
Re: (Score:1)
If he borrowed customer funds, they would have had to have consented to it, and he would be paying them back. That is how borrowing works.
He stole his customer's funds and him, and his lieutenants have already admitted to doing that.
I'd love to borrow money from you sometime.
Re:Types of investment (Score:4, Insightful)
Since these "investments" seem to be worthless it would seem that it was truly theft of customer funds laundered through these companies. I'm sure somebody is following the money. Money doesn't just disappear... it always goes somewhere.
Re: (Score:1)
https://youtu.be/9_H1_8-CKls [youtu.be]
Re: (Score:2)
Borrowing? You mean stealing, right?
Oh my, "stealing" is such a harsh word.
Anyway yes they were stealing but they swear on their grandma's grave that they was gonna give it all back!
So think of it more as a "loan" that you unknowingly gave them (forever!) without all the tedious overhead of paperwork and bookkeeping and all that boring stuff.
And yes they didn't tell you that you were giving, errr, I mean 'loaning' them money, but it was supposed to be a surprise! Yeah, a surprise! That's it!
So you see guys it was just all a very funny and com
Lol the Dave app. (Score:3)
So the founders of Dave had no ability to manage their own money, why should they be allowed to touch yours?
As for that $100,000,000.00 investment, it was a convertible note that never was converted - so if Dave remains viable someone might get that 100 mil back with interest! Good luck.
Not directly evil, but... (Score:2)
I don't even think SBF is evil. Just stupid. Too much money flowing through, the zeroes didn't mean anything. A hundred million here, a hundred million there. He probably tipped the pizza delivery guy a million or two.
Not that it matters, of course. Once you're handling other people's money, you have certain obligations, which he clearly did not take seriously. His assets need liquidated, and so do the assets of his parents (he apparently gave them a few hundred million as well). After making him a pauper,
Re: (Score:2)
He might actually have a chance using a defense of mental incompetence.
Re: (Score:2)
My definition of evil now is that the core has the belief "the ends justify the means". So even if you try to do good, how you get there matters. No way SBF thought he was really helping the customers; his end goal was his own money and the means were by "borrowing" customer's money, hyping up value, gaming the system. So, yes, there's some evil here, possibly Neutral Evil bordering on Chaotic. Unless he's just an idiot, in which case it might be Chaotic Neutral.
His political donations were a pittance an
Re:Not directly evil, but... (Score:4, Interesting)
I don't even think SBF is evil. Just stupid.
The second has no power to negate the first. He was engaged in many plainly illegal and intentionally deceptive practices, but he did it is a ham-handed and simplistic way. Making $8 billion in debt disappear by moving it into a mislabeled account on your own service and then telling auditors - "don't look at that one"?
Enron at least used shell companies to hide their debts.
Re: (Score:3)
Enron at least used shell companies to hide their debts.
That's the difference between open sourced villainy versus corporate villainy.
Re: (Score:2)
He has tried to portray himself as a well meaning, altruistic guy who just got in over his head and is "truly sorry".
I don't believe it. He knew exactly what he was doing.
Best way for him to be truly sorry is for him to sit in jail for a long time.
Why is it (Score:2)
Why is it every fucking thing I hear about crypto sounds like a continuously-occurring disaster blowing up in everyone's faces?
Every goddamn story is about how some exchange is failing or coin prices are unstable or a new insider-ripoff was discovered (like Sam Bankrupt-Fraud) or rug-pulls, or coins cratering, weird financial shenanigans (i.e. "crimes"), etc etc etc....it never ends.
At this point how and why is anyone confident enough in crypto to put real money into it?
It seems like a ridiculously risky th
Re: (Score:1)
I guess some (stupid) people may invest in cryptocurrency for the same reasons some invest in a lotto ticket, junk bond, penny stock or any other get-rich-quick scheme.
I first got into bitcoin shortly after it came out. I mined 5-6 whole bitcoins with my little Radeon R9 280X on slushpool. I thought it was pretty cool when I got a few hundred USD for them.
After I got out of the military (2014), I used BTC to buy weed on dark net markets. I got way better deals than the street prices where I lived at the tim