The Lifeboat News
[ Message Archive | The Lifeboat News ]

    It rang a bell. MoA reported on this a couple of days ago .. Archived Message

    Posted by Tomski on November 14, 2022, 12:46 pm, in reply to "Bidens magic funding..."

    I also thought I read somewhere that the donations to Ukraine, a large sum, also went up in smoke. Perhaps it is in the comments section.

    https://www.moonofalabama.org/2022/11/prosecution-futures-the-downfall-of-ftx-and-everything-crypto.html#more

    Prosecution Futures - The Downfall Of FTX And Everything Crypto

    I have been in awe this week about the stupidity of the people who had invested in the crypto-'exchange' FTX. I am likewise in awe that anyone would have 'parked' their 'money' in an account of that unregulated entity. How stupid can one be?

    Crypto 'currencies' have no real purpose. They ain't money. Their value solely depends on the trust people have in them. When the trust vanishes their values go to zero. That is what happened to FTX and the FTT 'currency' the company had issued:

    The 30-year-old had set up Bahamas-based FTX in 2019 and led it to become one of the largest exchanges, accumulating a near $17 billion fortune.
    News of the liquidity crunch at FTX – valued in January at $32 billion with investors including SoftBank and BlackRock – sent reverberations through the crypto world.

    The price of major coins plummeted, with bitcoin slumping to its lowest in almost two years, heaping further pain on a sector whose value has fallen about two-thirds this year as central banks tightened credit.

    When Softbank's Vision Fund invests into something it is a sure sign that its value will soon sink.

    There was a lot of criminality involved here. FTX lent its customers' 'money' to Bankman-Fried’s trading firm, Alameda Research, which had invested it in a number of other loss making crypto schemes. The likewise shady crypto 'exchange' Binance had owned a big share of FTX's 'currency'. Last Sunday it announced that had sold all of it. That was the squeeze that toppled its main competitor. The whole scheme came down. The trust was gone. People pulled their 'money' from the FTX 'exchange' accounts. The company no longer had access to enough money to pay out what it owned. Yesterday it went into bankruptcy.

    Some of the money that FTX allegedly gave to Alameda Research had vanished on its way:

    At least $1 billion of customer funds have vanished from collapsed crypto exchange FTX, according to two people familiar with the matter.
    The exchange's founder Sam Bankman-Fried secretly transferred $10 billion of customer funds from FTX to Bankman-Fried's trading company Alameda Research, the people told Reuters.

    A large portion of that total has since disappeared, they said. One source put the missing amount at about $1.7 billion. The other said the gap was between $1 billion and $2 billion.

    The whole thing was, like about anything crypto, one huge fraud:

    The documents showed that between $1 billion and $2 billion of these funds were not accounted for among Alameda's assets, the sources said. The spreadsheets did not indicate where this money was moved, and the sources said they don't know what became of it.
    In a subsequent examination, FTX legal and finance teams also learned that Bankman-Fried implemented what the two people described as a "backdoor" in FTX's book-keeping system, which was built using bespoke software.

    They said the "backdoor" allowed Bankman-Fried to execute commands that could alter the company's financial records without alerting other people, including external auditors. This set-up meant that the movement of the $10 billion in funds to Alameda did not trigger internal compliance or accounting red flags at FTX, they said.

    The guy is now on the run.

    There is a different aspect of the story that deserves a lot more scrutiny:

    Mr. Whale 🐳 whalechart.org @WhaleChart - 13:53 UTC · Nov 11, 2022
    🔸 April 25, 2019: Biden announces his presidential campaign.
    🔸 13 days later, Sam Bankman-Fried, son of Barbara Fried (co-founder of political fundraising organizations), launches #FTX crypto exchange.
    🔸 The exchange is an overnight success. SBF becomes biggest donor to Biden.

    It really makes you think right?
    FTX imploded on election day by the way :-(

    Sam Bankman-Fried's mother is a "co-founder of the political fundraising organization Mind the Gap, which advocates for progressive political candidates and funds get-out-the-vote groups."

    Sam Bankman-Fried put a lot of the money he had 'owned' into Democratic politics:

    The 30-year-old Bankman-Fried has been a major force in Democratic politics, ranking as the party’s second-biggest individual donor in the 2021–2022 election cycle, according to Open Secrets, with donations totaling $39.8 million. That ranks only behind George Soros (about $128 million) but ahead of many other big names, including Michael Bloomberg ($28.3 million). What’s more, he had promised to spend far more on Democrats moving forward, predicting in May that he’d fund “north of $100 million” and had a “soft ceiling” of $1 billion for the 2024 elections.
    ...
    Bankman-Fried was a major donor to President Joe Biden in the 2020 election and is the primary donor to the Protect Our Future PAC, the political action committee which endorsed Democratic candidates such as Peter Welch, who this week won his bid to become Vermont’s next senator, and Robert J. Menendez of New Jersey, who secured a House seat.
    That was either protection money or a well played scheme by the Democrats to finance their elections. Then again- it may have been both.

    The White House was directly involved:

    A cryptocurrency billionaire facing federal investigation for mishandling customer funds had high-level White House meetings just months ago, as Congress was debating how to regulate his company—and just weeks before he pledged to donate up to $1 billion to Democrats ahead of the midterm campaign.
    Sam Bankman-Fried, the owner of cryptocurrency exchange FTX, met on April 22 and May 12 with top Biden adviser Steve Ricchetti, according to White House visitor logs reviewed by the Washington Free Beacon. At the time, FTX was lobbying Congress and federal agencies to shape regulation of the crypto industry.
    ...
    [Bankman-Fried] gave more than $5 million to Biden’s 2020 presidential campaign, and has given millions more this cycle to the Democratic Party. In early May, between his first two visits to the White House, Bankman-Fried doled out $865,000 to the DNC, according to Federal Election Commission records. Earlier, in March, he cut three checks totaling $66,500 to the Democratic Senate Campaign Committee, and later in June he sent $250,000 to the Democratic Congressional Campaign Committee.

    He said in June, weeks after his most recent White House meeting, that he might give up to $1 billion to support Democrats in the midterms, though he backed away from that pledge in September.

    Amid the political spending, Bankman-Fried has led an aggressive lobbying campaign in Washington related to cryptocurrency regulation. He met with Ricchetti, the White House counselor, on April 22 and May 12, according to visitor logs. He met on May 13 with Charlotte Butash, a policy adviser to the White House deputy chief of staff.

    Bankman-Fried was accompanied in some of the meetings by Mark Wetjen, the head of policy and regulatory strategy at FTX, who served as commissioner on the Commodity Futures Trading Commission under former president Barack Obama. Eliora Katz, FTX’s chief lobbyist, also attended the meetings but did not mention lobbying the White House in disclosures filed with Congress.

    Bankman-Fried’s meetings came weeks after White House officials met with his brother, who directs the billionaire’s political operations. Gabe Bankman-Fried visited the White House on March 7 along with Jenna Narayanan, a Democratic strategist who once worked for Tom Steyer and the Democracy Alliance, a network of wealthy liberal donors who fund left-wing causes. Gabe also attended the May 13 meeting with his brother and FTX’s lobbyists.
    ...
    Bankman-Fried has lobbied for a bill proposed by Senate Agriculture Committee chair Debbie Stabenow (D., Mich.) that would put the Commodity Futures Trading Commission in charge of crypto regulation. Bankman-Fried donated $5,800 to Stabenow’s campaign in February, and $20,800 to her joint fundraising committee in January. Bankman-Fried contributed to other Democratic members of the committee amid his lobbying campaign. He sent a combined $31,000 to campaigns and joint fundraising committees tied to Sens. Cory Booker (D., N.J.), Tina Smith (D., Minn.), Dick Durbin (D., Ill.), and Kirsten Gillibrand (D., N.Y.) from October 2021 through June. Bankman-Fried also contributed to top Republicans on the Senate Agriculture Committee. The crypto billionaire gave $5,800 each to ranking member John Boozman (R., Ark.) and Sen. John Hoeven (R., N.D.) in January and June, respectively.

    Its one big swamp. Its purpose here was to steal money from those little guys who are prone to fall for such schemes.

    This whole crypto stuff was always bad.

    I had read the founding bitcoin paper soon after it came out. It was written by an anonymous under the name of one Satoshi Nakamoto. That was the first red light. I suspected and still suspect that some 'western' secret services had come up with the scheme to have a way to secretly move money around.

    As I had previously done a bit of banking IT I knew of the difficulties of mass transactions. I found that the blockchain, a public ledger mechanism that preserves a public record of every bitcoin transaction, was way too complicate for a substantial amount of global transactions. It would never reach the speed real money transaction systems, like those for the big credit card issuers, inherently have. I also thought it would be dangerous to have every private transaction recorded in a public ledger everyone could see and analyze. That would make true anonymity of such payments nearly impossible.

    The amount of coins in the system was also inherently limited which brought with it all the problems of gold back currencies. There are reasons why we no longer use those.

    The whole system of exchanges and other companies build around it was unregulated, insecure and prone to fraud.

    I have therefore always refrained from using bitcoins or other such currencies and have even rejected them when they were offered to me as donations. Finally the hype over last years convinced me that this crypto stuff was just one big Ponzi scheme in which small people put money into unregulated criminal entities which were guaranteed to steal it.

    I liked how Yves Smith of Naked Capitalism characterized these 'currencies' and their surrounding as 'prosecution futures'.

    It turned out that it is exactly what they are.

    Posted by b on November 12, 2022 at 17:26 UTC

    Message Thread: