Scrutable

crypto-libertarianism grows out of the coddled exceptionalist american experience.

FTX: conscious and intentional fraud

nekomatic wrote: Fri Dec 02, 2022 10:35 am FTX: conscious and intentional fraud

That's hilarious. Not even an attempt to cover their tracks. "Shall we launder this through off-shore accounts in the Caymans?" "Nah, why bother."

Just pointing out that we've been here before in various guises, for example... https://en.wikipedia.org/wiki/Wildcat_banking

The joke in nerd circles is that crypto idiots are speed running mainstream financial history.

Article on Bitcoin and the philosophy that drives it. Expands on the ideas I mentioned above about it being a libertarian idiocy.

https://davidgerard.co.uk/blockchain/th ... f-bitcoin/

bjn wrote: Fri Dec 09, 2022 7:37 am Article on Bitcoin and the philosophy that drives it. Expands on the ideas I mentioned above about it being a libertarian idiocy.

https://davidgerard.co.uk/blockchain/th ... f-bitcoin/

Thanks, comparing it to the gold standard really helps clarify things for a numpty like me.

Behind it all is the idea that money is a thing that should have inherent value separate from economic activity.

bjn wrote: Fri Dec 09, 2022 9:37 am Behind it all is the idea that money is a thing that should have inherent value separate from economic activity.

And the contradiction that crypto has no inherent value, except stablecoins which gain their inherent value from the Proper Money that backs them.

IvanV wrote: Fri Dec 09, 2022 10:04 am

bjn wrote: Fri Dec 09, 2022 9:37 am Behind it all is the idea that money is a thing that should have inherent value separate from economic activity.

And the contradiction that crypto has no inherent value, except stablecoins which gain their inherent value from the Proper Money that backs them.

The Proper Money that the advocates claim back them... But with varying levels of transparency and plausibility.

Grumble wrote: Fri Dec 09, 2022 8:50 am

bjn wrote: Fri Dec 09, 2022 7:37 am Article on Bitcoin and the philosophy that drives it. Expands on the ideas I mentioned above about it being a libertarian idiocy.

https://davidgerard.co.uk/blockchain/th ... f-bitcoin/

Thanks, comparing it to the gold standard really helps clarify things for a numpty like me.

Gerard’s Attack Of The Fifty Foot Blockchain is a good book to read on crypto crap.

From a group chat between execs from different crypto companies on Signal:

The more damage you do now, the more jail time

https://www.nytimes.com/2022/12/09/tech ... sages.html

Whole industry sounds like a criminal cartel (yeah, I know cartels are generally illegal).

Brightonian wrote: Sat Dec 10, 2022 11:21 am From a group chat between execs from different crypto companies on Signal:

The more damage you do now, the more jail time

https://www.nytimes.com/2022/12/09/tech ... sages.html

Whole industry sounds like a criminal cartel (yeah, I know cartels are generally illegal).

And from it, we see that most of the crypto ecosystem is tightly coupled to each other, relies on one central stable-coin system, and that relatively small amounts of trading can destabilize that stable-coin.

The texts also show that industry leaders were acutely aware that the actions of a single firm or fluctuations in the value of one virtual currency could destabilize the whole industry. The exchanges became increasingly tense as Mr. Bankman-Fried and Mr. Zhao traded barbs.

Tether is a stable-coin pegged to the US dollar that is widely used for trading crypto.

In one of the Nov. 10 messages to the group, Mr. Zhao pointed out a $250,000 trade by Alameda that he said was intended to destabilize Tether. The trade was visible on the blockchain, a public ledger of cryptocurrency transactions that anyone can view.

In response to Mr. Zhao’s accusations, Mr. Bankman-Fried seemed nonplused. “Huh?” he said. “What am I doing to stablecoins?”

“Are you claiming that you think that $250k of USDT trading would depeg it?” he added, using a common shorthand to refer to the Tether currency.

It didn't actually depeg, but if a $250k trade could cause concern about depegging, then the system could be collapsed really easily

It seems that SBF has been arrested in the Bahamas today, on the basis of a warrant from the US.

lpm wrote: Fri Dec 02, 2022 1:17 pm

nekomatic wrote: Fri Dec 02, 2022 10:35 am FTX: conscious and intentional fraud

That's hilarious. Not even an attempt to cover their tracks. "Shall we launder this through off-shore accounts in the Caymans?" "Nah, why bother."

Um... they had a Signal chat group called "Wirefraud" to chat about their wire fraud...

The FCA fortunately refused to give FTX an authorisation to operate in Britain, though of course there were many British customers who engaged with it on-line and unprotected. I was rather hoping this might be because the FCA was sensible enough to refuse all crypto exchanges authorisation in Britain. But this is not so. Though it is a bit tricky finding a list of who is authorised, and it turns out that some of them have temporary authorisations that should have been determined in mid-21, but the final day of judgment has been deferred.

It seems that until end 2020, crypto exchanges operated outside the purview of the FCA within Britain as unregulated activity. But then in Jan 2021, the FCA required them to register, if they wished to operate "in" Britain, whatever that means, to demonstrate compliance with anti-money laundering rules. It was possible to get a temporary registration initially, and they had 6 months to comply properly to get a proper registration. One news article suggested that at one point there were about 34 temporary registrations, but it fell since then. Whilst some larger exchanges were eventually refused registration at the end of the 6 month grace period, some smaller ones have had temporary registrations extended, and the FCA has talked about 3 years to finish the process.

So the largest of them, Binance, was unable to satisfy the requirements, and had to cease all regulated activity in Britain in mid 2021. FTX was also denied registration.

But there are quite a few registered exchanges, not just on this temporary never-never basis. Crypto.com is a larger one that achieved a UK registration as recently as August 2022, and also registered in Paris.

So it would seem that the FCA has not been caught with its pants down authorising a demonstrably dodgy crypto exchange yet, but the risk remains. It has fortunately denied registration to the most egregious cases. But with all these temporary registrations in limbo, there is a chance of a problem yet. And of course FCA registration is no guarantee of good behaviour, plenty of dodgy operators were FCA registered, like BCCI. The main concern of the FCA in overseeing these exchanges is preventing money-laundering, not protecting customers.

I went down this little rabbit-hole because a youtuber I sometime watch had a Crypto.com advert on his backdrop for a while, but it has gone now. Doubtless he noticed that various celebrities promoting FTX got sued. So I wondered who crypto.com are, and found out that they are actually authorised in the UK, as of very recently.

No good will come of, I should expect. But there are prominent members of the present govt who see this as part of a tech and finance future the UK should make a lot of money out of, and needs to be encouraged. Likewise Jeremy *unt was proposing just the other day relaxing some of those rules we found we needed after the misdeeds that led to the global financial crisis. We've always ended up paying for that kind of thing, so it smacks of desperation to be trying it again.

lpm wrote: Tue Dec 13, 2022 3:31 pm Um... they had a Signal chat group called "Wirefraud" to chat about their wire fraud...

Yep, reported here.

Relatedly, Binance, the main competitor and now successor to FTX, has had $1.9 billion of withdrawals in 24 hours.

From my understanding, he actually gave slightly more to the republicans.

Two former top executives of Sam Bankman-Fried’s crypto trading empire have pleaded guilty to federal criminal fraud charges and are cooperating in the case against the disgraced crypto entrepreneur, the U.S. attorney for the Southern District of New York said on Wednesday night.

The two are Caroline Ellison, who was the chief executive of the cryptocurrency trading company Alameda Research, and Gary Wang, a founder of the FTX crypto exchange. They were key lieutenants in Mr. Bankman-Fried’s vast business empire, which rested primarily on FTX and Alameda, companies that he founded and ran.

The Securities and Exchange Commission also filed civil fraud charges against Ms. Ellison and Mr. Wang on Wednesday. The S.E.C. said that Ms. Ellison, 28, had misused FTX customer deposits to fund Alameda’s trading activity and that Mr. Wang, 29, had created software that allowed that diversion of funds to take place. The S.E.C. case builds on civil charges filed against Mr. Bankman-Fried, 30, this month.

The guilty pleas and cooperation agreements are a major advance in the criminal fraud case against Mr. Bankman-Fried, who is in U.S. custody after agreeing to be extradited from the Bahamas earlier on Wednesday.

https://www.nytimes.com/2022/12/21/tech ... pleas.html

Woodchopper wrote: Thu Dec 22, 2022 4:05 am

Two former top executives of Sam Bankman-Fried’s crypto trading empire have pleaded guilty to federal criminal fraud charges and are cooperating in the case against the disgraced crypto entrepreneur, the U.S. attorney for the Southern District of New York said on Wednesday night.

The two are Caroline Ellison, who was the chief executive of the cryptocurrency trading company Alameda Research, and Gary Wang, a founder of the FTX crypto exchange. They were key lieutenants in Mr. Bankman-Fried’s vast business empire, which rested primarily on FTX and Alameda, companies that he founded and ran.

The Securities and Exchange Commission also filed civil fraud charges against Ms. Ellison and Mr. Wang on Wednesday. The S.E.C. said that Ms. Ellison, 28, had misused FTX customer deposits to fund Alameda’s trading activity and that Mr. Wang, 29, had created software that allowed that diversion of funds to take place. The S.E.C. case builds on civil charges filed against Mr. Bankman-Fried, 30, this month.

The guilty pleas and cooperation agreements are a major advance in the criminal fraud case against Mr. Bankman-Fried, who is in U.S. custody after agreeing to be extradited from the Bahamas earlier on Wednesday.

https://www.nytimes.com/2022/12/21/tech ... pleas.html

From a British perspective, it is unbelievable how quickly they make progress on this kind of thing. Nothing would happen for at least 7 years here.

Huh? Trumps first big money laundering deal was in 1984. That's 38 years of protection from prosecution.

It takes a lot longer when they don't plead guilty, and presumably don't take a plea deal. If that happens, prosecutors have to prove things.

monkey wrote: Thu Dec 22, 2022 5:37 pm It takes a lot longer when they don't plead guilty, and presumably don't take a plea deal. If that happens, prosecutors have to prove things.

Indeed. But by British standards, it is amazing that a charge came that quickly.

And the US justice system does strongly encourage early guilty pleas. And that has its advantages, but also its unfairnesses. At times the plea bargain system in the US justice system can look more like an extortion racket than justice. Even the innocent may find it attractive plead guilty - some would say often - because cost of even a successful defence can be so larger in comparison to pleading guilty. It is somewhere between unlikely and impossible that you will be awarded the costs of your defence, even if cleared on all charges. It seems that the innocent are not held harmless against the march of the justice system.

IvanV wrote: Fri Dec 23, 2022 11:35 am

monkey wrote: Thu Dec 22, 2022 5:37 pm It takes a lot longer when they don't plead guilty, and presumably don't take a plea deal. If that happens, prosecutors have to prove things.

Indeed. But by British standards, it is amazing that a charge came that quickly.

And the US justice system does strongly encourage early guilty pleas. And that has its advantages, but also its unfairnesses. At times the plea bargain system in the US justice system can look more like an extortion racket than justice. Even the innocent may find it attractive plead guilty - some would say often - because cost of even a successful defence can be so larger in comparison to pleading guilty. It is somewhere between unlikely and impossible that you will be awarded the costs of your defence, even if cleared on all charges. It seems that the innocent are not held harmless against the march of the justice system.

You mean there are times where it doesn't?