Balaji Profile picture
Nov 15 11 tweets 7 min read
The net result of FTX is that billions of dollars was stolen from crypto investors to give to Democrat-aligned politicians, nonprofits, and journalists.

This is why there may be no prosecution.
Why is SBF so protected?

Why is everyone from SEC to NYT running interference for him?

He was basically Soros junior — just with stolen customer money — and evidently bought off the entire media, nonprofit, political, and regulatory establishment.
The author is a born-rich journo. So he knows Bankman-Fried’s milieu.

And the overall picture you get is of rats scurrying around now that SBF’s money has been cut off — and very much not wanting defrauded crypto investors to clawback those stolen funds.
The stage is set for an absolutely insane zero-sum match.

On one side, one million crypto investors robbed of ten billion dollars by SBF.

On the other side, a network of dark money Democrats who will fight to keep as much of those stolen funds as possible.

The fur will fly.
The bankruptcy case may play out on social media.

Crypto investors seeking to get FTX funds back may hire lawyers like Irving Picard, who clawed back ~75 cents on the dollar for Madoff victims.

And who would they claw it back from? The groups SBF funded.
The fundamental question is: when did SBF start stealing from customers, and how much did he steal?

This can only be answered by forensic accounting.

The headline amount given to Democrat politicians of $37M+ understates it. FTX Foundation alone was $190M.

How much was stolen?
We need a list of all the “donations” SBF made, potentially with stolen money. Here are at least four:

- $69M in political donations, mostly to Democrats, some to Republicans via his subordinate
- $190M to a foundation
- $128M to a PAC
- Undisclosed amount (!)

There’s more…
All kinds of obfuscation games have been played here. Donations made with possibly stolen funds. Numbers that are publicly known may just be the tip of the iceberg.

Where did the ten billion go? How much was stolen? And when was it stolen?
The Crypto Clawback

Anyone with money on FTX may want to learn the following terms:

- clawback
- lookback
- fraudulent conveyance
- unjust enrichment
- voidable preference

Ask a lawyer. You may be able to recover funds by pursuing the organizations SBF “donated” your money to.
This is why the establishment has been so muted on SBF!

It’s because one million crypto investors might clawback billions of dollars, by pursuing the many nonprofits, politicians, and media corporations SBF “donated” their money to.
Ask a lawyer. If FTX stole your money, you may be able to sell your bankruptcy claim.

An investor might buy claims for X cents on the dollar, taking on the risk of getting Y>X at a future date.

For $10B, many groups SBF “donated” to could be pursued.…

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More from @balajis

Nov 12
Pagerank is one way to quantify reputation. How do we quantify trust?
There’s a fair amount of literature on the Trust Game from game theory. And surveys by organizations like Edelman. And various works on social capital.

What else we got?…
I do believe in decentralization as a way to build trust-minimized applications. We need this to exit the establishment.

But we also need mechanisms for consensual recentralization, to build new trust-maximizing communities.…
Read 4 tweets
Nov 11
The US government-regulated system spent $787 billion of taxpayer money bailing out the banks. Connected bankers weren’t prosecuted. And that’s before they printed trillions.

We’re now exploring the alternative timeline. What if no bailouts?
Wanting the establishment to regulate after all the financial crashes is like wanting a drunk driver to serve as policeman after all the car crashes.

They said volatility was over.
They caused the mortgage bubble.
They incinerated trillions.
And the world couldn’t opt out. ImageImageImageImage
We already know what a system of captured regulators & banker bailouts looks like. That’s what FTX was lobbying for. That’s what we’re speedrunning *away* from.

The new system is decentralized exchanges, user controlled wallets, proof-of-reserve, and cryptographic verification.
Read 5 tweets
Nov 11
Blue checks combine a few different concepts:

- is this account a human?
- is it unique?
- is it who it says it is?
- and is it important?

@elonmusk can still change course, but right now his solution to the bot problem is causing a more damaging impersonation problem.
Damaging to Twitter, that is — but perhaps not society.

If people learn to not trust tweets from verified users without doing diligence (and arguably they shouldn't), you get a Tower of Babel moment where everyone redecentralizes.

All would now agree: the public square is fake.
Facebook was money, Twitter is status.

Twitter isn't the biggest network. Or the most valuable. But it's where the world's elites congregate to slug it out each day. The global echo chamber.

Unless it becomes a hall of mirrors, and everyone checks out.
Read 5 tweets
Nov 11
Four kinds of trust falling at the same time.

Trust in vote counting
Trust in verified tweets
Trust in vouched reserves
Trust in visual images

Cryptographic verification is a partial solution. But also need high-trust startup societies.
The slow vote counting process is making it hard for some to trust the political system.

Estonia does have a better alternative in the form of cryptographically verifiable voting. But they also have a higher trust society.…
The change in checkmarks is making it hard for many to trust statements from verified accounts.

GitHub does have a better alternative in the form of GPG-signed commits. But the real answer may be that people just trust the people they know, and assume institutions are fake.
Read 6 tweets
Nov 6
Just to explain (not a dunk) — Apple can pull off hardware but most startups can’t.

You need to be flawless on execution when it comes to physical product. Can’t just backspace if you make a mistake. And even then you can get killed by supply chain forces outside your control.
Two of the very best hardware companies of recent times — Oculus and Fitbit — had to eventually be acquired by software companies with high margins that could fund the punishing costs and uncertainty of hardware development.
Now, layer on top of that:

- The US/China trade war
- That no one else has the hardware ecosystem of Shenzhen (and China more generally)
- That successful hardware is quickly cloned
- The high quality of the existing hardware you’d have to compete with

It’s hard.
Read 4 tweets
Nov 5
Mobility is liquidity.
Cash is king, but passport is queen.
Buffett likes cash because of its optionality. That’s also what mobility gives: optionality.
Read 5 tweets

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