FTX Post-Mortem: Bankman-Fried Admitted The "Ponzi Business" Of Crypto Yield Farming

(13-11-2022, 05:52 PM)LionFlyer Wrote: It is also amazing to me that due diligence process of the likes of Temasek and Sequoia did not pick up any of these. SBF appeared like Pipe Pipper and charmed the whole lot of them.

I think we have to give these folks some slack.

Private capital is about what is probable. Venture capital is about what is possible. Of course both of them need to do their risk assessment/due diligence but looking at what is possible (Venture capital) probably features more dominantly than risk assessment/ due diligence.

Since these guys invested in their ~Series B/C funding, I regard that they are still investing from a Venture Capitalist's mindset. And for VCs, there will always be more losses than gains in terms of absolute numbers. The guys in charge probably lost a fellow hundred million for their firm but they should be judged from the perspective of the whole portfolio, not a single failed investment.

(14-11-2022, 11:18 AM)weijian Wrote: Private capital is about what is probable. Venture capital is about what is possible. Of course both of them need to do their risk assessment/due diligence but looking at what is possible (Venture capital) probably features more dominantly than risk assessment/ due diligence.

I was thinking about this in the morning but didn't have the time to put my thoughts together.

Indeed, a VC mindset would see them look at factors beyond the current book value but market potential, opportunities and so on. But when startups fail, they fail for reasons due to the business or inability to execute. Simple list here : https://www.cbinsights.com/research/star...asons-top/

But this failure has more to do with basic level compliance and governance issues and what is striking to me is the lack of board oversight. None of these investors ask for seat on the Board in their term sheets where they could have a better view on where their money is going / used and if there are any of such governance problems.

This high level of trust on SBF... well, maybe they think he is the next Zucks or Brin.

(14-11-2022, 01:41 PM)LionFlyer Wrote: But this failure has more to do with basic level compliance and governance issues and what is striking to me is the lack of board oversight. None of these investors ask for seat on the Board in their term sheets where they could have a better view on where their money is going / used and if there are any of such governance problems.

This high level of trust on SBF... well, maybe they think he is the next Zucks or Brin.

The next Zucks or Brin will be one of the many Zucks/Brin wannabes (if you are a soccer fan, you know what I mean - they are so many wonderkids and then almost just as much who never lived up to their potential). At the point of time, one just doesn't know who exactly will end up as the real "next Zuck/Brin".

I am obviously not a VC insider and hence not able to comment much into the details. But my reading informs me that in the last 5years of the not-so-rare unicorn-verse, the hot startups own the bargaining power, especially when the VC is not a marque name itself. And many times than not, most asset management firms tout their risk management/due diligence, but it is probable only a small percentage of them, really think out of the box or go the extra mile. Where is the skin in the game?

I cut some slack to these high powered employees. But at the same time, I recognize their limitations/mistakes and try to learn from them.

Would be interesting if someone dump Binance coin....


How FTX Went Bankrupt | What Went Wrong | WSJ
https://m.youtube.com/watch?v=AbgRB3arCpY


About 40% of Binance's $74.7 billion of holdings are in the firm's own native cryptocurrency and stablecoin, according to a report from Bloomberg.
https://markets.businessinsider.com/news...bf-2022-11

Contagion is spreading, it seems...It is totally illogical to say "you have adequate liquidity" but paused client withdrawals.

Crypto lender BlockFi plans bankruptcy filing within days in FTX fallout
The crypto lender paused client withdrawals, citing uncertainties with FTX while saying it had adequate liquidity and was exploring options with outside advisers.
https://www.businesstimes.com.sg/garage/...tx-fallout

Crypto brokerage Genesis suspends withdrawals at lending arm
https://www.businesstimes.com.sg/garage/...ending-arm

How bad were FTX's internal controls?
https://mobile.twitter.com/GRDecter/stat...2047580161

Auditors will never be able to find out how an X sum of money were dispensed if there is no documentation.

There are other further diggings which said that employees used corporate funds to buy homes for their own.

Para 1 is a question. Who was the auditor auditing FTX, if there are no documentation on how funds had been spent/disbursed how did the external auditor approve the year end accounts annually. I will be checking on the quality of work of the US external auditor. This is because it was found there was a lack of documentation and yet auditors passed the accounts. A credible auditor would have flagged out the absence of documentations or post-dated documentation.

It gets more interesting as liqudators try to trace the assets trail. This time it seems he has colluded with a government to enjoy US$1billion to US$2billion in wealth. Worth noting his group of executives are in the bahamas.

How I wish I was part of these group of 6 :p (Pls dont report me to CAD); wondered how the NUS graduate was recruited to be part of this elite circle. (she probably made away with an amount more than what Kong Hee acheived)

https://www.cnbc.com/2022/11/17/ftx-sugg...iling.html

Genesis Timeline
https://mobile.twitter.com/CryptoCred/st...6282534912

Good article that commented on Vitalik Buterin's remarks to ST, especially on centralized versus decentralised

https://vulcanpost.com/809399/why-vitali...lockchain/