> Bankman-Fried’s arrest comes the night before he was scheduled to testify remotely in front of the House Financial Services Committee, which is investigating the collapse of his multibillion-dollar crypto empire. Bankman-Fried — who until early November was the toast of Washington policy circles — has faced mounting allegations that he misused FTX customer assets to prop up his investment firm Alameda Research.
> In prepared testimony for House Financial Services, the company’s new CEO John Ray III, wrote that Alameda used client funds to engage in margin trading, exposing customers to massive losses.
> "[T]he FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people’s money or assets,” Ray, who stepped in as the bankrupt cryptocurrency exchange’s top executive last month, wrote in prepared Congressional testimony on the exchange’s collapse.
If he was going to try to follow #Wells_Fargo's example, he needed to follow it more closely. I recently posted a link to angryretailbanker's article where they described why they didn't believe WF's top managers should be jailed. (I personally disagree about Wells Fargo management, simply because if you see the same misbehavior sprout up at the same time across the whole organization, it generally means one person or group with supervision over the entire group ordered or suggested it ... often off-the-record, so you'd have to actually investigate to find enough evidence to convict.)
@gnu2 I think the issue is on-ramps. Most people get an account at an exchange in order to get involved in the #cryptocurrency space. It then takes extra steps to move all one's purchases into a self-custody wallet. Not to mention that there's a transaction cost for moving from one's exchange-custody wallet to one's self-custody wallet and a similar cost if one wants to move it back.
#FTX former CEO #SBF says he did not intend to commit fraud.
> triking a contrite tone, former FTX CEO Sam Bankman-Fried said he “didn’t do a good job” at upholding his responsibilities to regulators, customers, and investors in a hotly anticipated conversation with CNBC’s Andrew Ross Sorkin at the Dealbook Summit.
> “I didn’t ever try to commit fraud on anyone,” Bankman-Fried said. “I saw it as a thriving business and I was shocked by what happened this month.”
> Sorkin asked Bankman-Fried why FTX and Bankman-Fried even had access to customer money.
> “I wasn’t running Alameda, I didn’t know exactly what was going on, I didn’t know the size of their position,” Bankman-Fried said. “A lot of these are things I’ve learned over the last month [in the days leading up to bankruptcy.
Now, what seemed to have sunk the platform was the revelation that his #Alameda fund was heavily into FTX's own #cryptocurrency #token ... and then later learning that customers' FTX account funds had been moved into Alameda. If he'd let customers' funds alone and not drained from the exchange to support the investment fund. ( https://nu.federati.net/url/288705 [www cnbc com] )
> The quant trading firm Sam Bankman-Fried founded was able to quietly use customer funds from his exchange FTX in a way that flew under the radar of investors, employees and auditors in the process, according to a source.
> The way they did it was by using billions from FTX users without their knowledge, says the source.
> Alameda Research, the fund started by Bankman-Fried, borrowed billions in customer funds from its founder’s exchange, FTX, according to a source familiar with company operations, who asked not to be named because the details were confidential.
If he'd not allowed the misuse of customer funds, even if Alameda collapsed, FTX probably would have continued with little disruption.
#Kraken, the 3rd-largest #cryptocurrency exchange, lays off 30% of its workforce, returning to the size it was late last year. Employees will receive 16 weeks of severance pay and benefits vesting will be extended. (Much better than what the Lane furniture company did.)
This could be more fallout from the failure of SBF's #FTX and associated companies, or it could be cyclical economic factors ... as cryptocurrency prices seem to rise and fall with the general economy.
Most of those have public blockchains, so with some correlating work, a sufficiently resourced adversary could de-anonymize many users already.
I think the #Monero #cryptocurrency ( #XMR ) has a mandatory mixer that blends several transactions together in order to make it harder to map transactions to specific parties.
But Monero used to be the currency that people would try to mine in other people's browsers and servers, so I still feel like it is tainted by criminals.
Seems to claim that someone involved in #Terra / #Luna knew about a protocol flaw and took advantage of it to defraud other Terra investors over a yearlong period.
Does this mean that there were no external attackers, just greedy insiders who collapsed the algorithmic #stablecoin?
If that is the case, this isn't just a #cryptocurrency thing. There are regulated financial institutions (e.g., savings banks, commercial banks, investment banks, REITs, mutual funds, and more) where insiders divert funds into their own hands. Many of the ones that get caught are eventually prosecuted, but by no means all.
It sounds analogous to the claims made around the collapse of the MTGOX exchange several years ago, but there are likely some similarities to the Wells Fargo scandal from a few years back as well.
@geniusmusing Thanks for this post. I was just investigating #Juno recently as one of the ways a future venture might receive payments. . As I understand it, a lot of online & mail order retailers have issues with chargebacks after the product has been delivered, so accepting payments in #cryptocurrency can be a way to reduce such fraud.
The fact is that the whole monetary systen (that includes banking, paypal, visa, mastercard...) may even consume 10 times more energy than the #cryptocurrency one (and it doesn't) overall BUT it serves billions times more transactions.
To estimate the difference you shouldn't just count computers transactions but all cash transactions.
That's why these energy comparisons are ridiculous.
For one thing, the only way to remove the reserve currency & #cryptocurrency used to pin the bean's value to the dollar should have been to surrender an equivalent value of the bean cryptocurrency for destruction.
For another, there should have been a delay between purchasing the coin and obtaining the voting rights it brings. This allows someone to notice large swings in bean ownership, so they can possibly try to counteract it.
And finally, just because computers and the Internet allow transactions to be rapidly performed does not mean that every transaction must be performed speedily. If the outbound funds transfer is slow enough, someone may be able to stop it before it completes.
Yes, each of these comes with its own negatives. But overall, if the only way to extract funds is to surrender equivalent value of stablecoin, and if both rigging elections and transferring loot takes a substantial time period, the thief is likely paying interest to someone. Raise their costs and reduce the likelihood of success enough and the DAO may scare off most of the people who would attempt such things.
I haven't checked further, but I presume Beanstalk is winding down, unless someone comes along and re-funds it enough to validate the pin again.
Likewise, I think I need to add a second credit card. When I got this one, it was going to be for online purchases. But when I'm on the road, it isn't easy to get cash for transactions, so I've been using my card. I still pay it off every month, but it will be easier for me to keep to track if there is a card for in-person transactions and a different card for online transactions.
And thirdly, I need to find a #cryptocurrency exchange that doesn't scare the **** out of me with the kinds of financial access they require. We (potential customers) have no easy way to judge their security, but we can definitely see whether a breach in their system could easily become a breach in our own bank accounts. (For example, if they use a 3rd party that scrapes your bank's website and therefore requires your login info. Which, if you think about it, is scary as ****.)
I don't think that keeping your "wallet" on an always-connected device is a good idea. Now if they made it easier for you to connect and then disconnect a hardware wallet when you desire to transact, that would be good. But this is dangerous bunk in my opinion.
First of all, I appreciate Moxie's honesty and directness. This isn't some cheap bash-and-trash. He actually tested some aspects of the #cryptocurrency and #web3 infrastructure and pointed out some glaring weaknesses.
Secondly, though, if you don't know history, you might not know that Moxie advocates for centralization, despite long-known security and privacy weaknesses that come when a centralized organization is the center of gravity in an ecosystem. His messaging software (Signal Messenger) is centralized.
And as Andre points out, Moxie glosses over one alarming consequence of centralization (the organization's ability to effectively disappear his NFT).
@vagrantc@cjd@duniter I really like those ideas. Captures my dislike of both proof-of-work and proof-of-stake. In fact, that's the first #cryptocurrency I'd consider getting involved with in any kind of serious way, as the others have serious environmental or social problems.