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naraburns  nihil supernum  1yr ago (text post)   31623 thread views

Culture War Roundup for the week of January 9, 2023

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I wouldn't be surprised if it turned out Wang and Ellison had orchestrated this whole thing, and SBF is simply a patsy.

Timing works out wrong. He set up Alameda himself first, talked Ellison away from Jane Street, and it looks like Wang and Singh were the other co-founders with him. Sam Trabucco was Alameda CEO first, then co-CEO with Ellison, then furled his sails and left and so she took over as sole CEO. (The Sequoia article continues to toast, butter and put jam on the bread for the background of all this):

About six months after SBF dropped out, Jane Street sent Ellison on a recruiting trip to California, so she decided to call on her old friend. They’d been office buddies at Jane, but they’d also occasionally socialized outside of work, too, being fellow EA acolytes.

[Bankman-Fried tells her the story of what he's been doing, mainly making a fortune off the 'kimchi premium']

As a Japanese citizen, he was able to open an account with the one (obscure, rural) Japanese bank that was willing, for a fee, to process the transactions that SBF—newly incorporated as Alameda Research—wanted to make.

...With a goosed-up capital account, the money started piling up so fast that SBF placed what he refers to as “a market order for employees” to tend to the Rube Goldberg operation that kept the capital spinning. There were constant blowups with banks, which are wary of anything crypto. Crypto was so new that regulators in South Korea and elsewhere were constantly changing their mind about regulations — then making those changes retroactive. It was a swirling mess. Pulled into the vortex was Nishad Singh, a friend of SBF’s brother Gabe, and a fellow EA member. ...After just one conversation with SBF, Singh decided to leave Facebook to take on the more meaningful work of building FTX. Caroline Ellison came, too, quitting Jane Street and moving to California only weeks after SBF described the operation to her over tea.

There's also Ryan Salame, who was making donations to the Republicans as Bankman-Fried and Singh were making donations to the Democrats (and for much the same reasons; butter 'em up to look favourably on FTX when it came to regulations and crypto structuring).

I don't know about Trabucco's reasons for leaving, he got out long before any revelations of something rotten in the state of Denmark so it's hard to know if he knew it was dodgy and left before he could be implicated, but Salame seems to have done some whistle-blowing:

The two new suspects’ guilty pleas provided some clarity as to the mindset of Bankman-Fried’s inner circle, which comprised not only Ellison and Wang, but also former FTX Director of Engineering Nishad Singh, former co-CEO of FTX Digital Markets Ryan Salame, and former co-CEO of Alameda Research Sam Trabucco. Court filings recently revealed that Salame blew the whistle on FTX’s activity to Bahamian regulators.

Regrettably, the Commission was informed today by Mr. Ryan Salame (“Mr. Salame”) who is the Chairman of FTX Digital that clients’ assets which may have been held with FTX Digital were transferred to Alameda Research (“Alameda”). Alameda and FTX Digital are related companies, specifically, Mr. Samuel Bankman-Fried is a founder of both FTX Digital and Alameda.

The Commission understood Mr. Salame as advising that the transfer of clients’ assets in this manner was contrary to the normal corporate governance and operations of FTX Digital. Put simply, that such transfers were not allowed and therefore may constitute misappropriation, theft, fraud or some other crime.

Mr. Salame further advised the Commission that there were only three (3) persons who had the necessary codes (or passwords) to transfer clients’ assets to Alameda in this manner, that is, the founders of FTX Digital who are: (i) Mr. Samuel Bankman-Fried; (ii) Mr. Nishad Singh and (iii) Mr. Zixiao (Gary) Wang.

Plus, the way it was all structured (John Jay's 'four silos' in the bankruptcy filing), Bankman-Fried was majority owner of the entities and was getting a billion dollar personal loan from Alameda (the others got smaller but still substantial loans):

To my knowledge, Mr. Bankman-Fried owns (a) directly, approximately 53% of the equity in Debtor West Realm Shires Inc.; (b) indirectly, approximately 75% of the equity in Debtor FTX Trading Ltd.; (c) directly, approximately 90% of the equity in Debtor Alameda Research LLC; and (d) directly, approximately 67% of the equity in Clifton Bay Investments LLC.

Related Party Loans Receivable of $4.1 billion at Alameda Research (consolidated) consisted primarily of a loan by Euclid Way Ltd. to Paper Bird Inc. (a Debtor) of $2.3 billion and three loans by Alameda Research Ltd.: one to Mr. Bankman-Fried, of $1 billion; one to Mr. Singh, of $543 million; and one to Ryan Salame, of $55 million.

So he isn't a simple patsy who was manipulated by a scheming math weasel as the fall guy.

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