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Compound248 💰

@compound248

Dec 22, 2022 • 20 tweets • 9 min read • Read on X

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@SBF_FTX

We just discovered Caroline Ellison and Gary Wang turned on @SBF_FTX, rattling him out to the Feds. The SEC’s civil (non-criminal) complaint is built on their participation and gives us our first “insider’s account” of the FTX disaster.

I’ve given you 12 key takeaways below:👇🧵

1. It is what we thought:

• SBF lied
• Wang built a back door to FTX for Alameda to sweep funds
• Caroline ran Alameda (Sam’s personal fund)
• Sam invested in real estate, politicians, and venture capital 😅

twitter.com/i/web/status/1…

2. 💥 Sam told me to do it

Caroline says Sam directed her to take customer funds from FTX in exchange for the made-up $FTT shitcoin. (In green highlight) This directly contradicts Sam’s repeated “I didn’t know” statements.

Caroline is wisely throwing Sam under the bus. twitter.com/i/web/status/1…

3. May 2022: Shit Hits the Fan

Despite already having “borrowed” billions and billions of FTX customer assets, by May, when crypto went bump in the night, Alameda (Sam) couldn’t fulfill its borrower obligations.

Sam ordered Caroline to take even more FTX customer money.

4. “Brazen, Multi-Year Scheme”

The violations peaked in 2022, but began years ago…from the start of FTX. This wasn’t a recent accident. It was a multi-year fraud.

5. Sam and Gary Own 100% of Alameda

Anytime someone says “Alameda,” just substitute “Sam.”

Sam owns 90% of Alameda and Gary 10%. Alameda has no clients - all that money is Sam and Gary’s, stolen fair and square.

6. Sam was ALWAYS in Control

Even after naming Caroline and Sam Trabucco as Co-CEOs of Alameda in 2021, Sam remained in absolute control.

He frequently communicated with Alameda peeps and had full access to its books and records.

Alameda *IS* Sam, so this makes sense.

7. Alameda (Sam) was Exempted from FTX’s Risk Management Process

As has been widely discussed, FTX had a decent risk-engine, it just didn’t apply to its biggest user: Sam himself (via Alameda).

At least Sam posted high-quality SamCoins - $FTT - as collateral. 😅

8. Sam CREATED Alameda’s Deal and Took Actions to Hurt FTX

Over $8 BILLION of customer funds were wired by customers DIRECTLY TO ALAMEDA rather than FTX.

Eight. Billion.

This was a de facto loan. Sam ensured Alameda (Sam) did NOT have to pay FTX interest on that money.

9. Securities Fraud

Among the many frauds Sam et al committed was the securities fraud.

The SEC frowns on poorly written footnotes. Imagine how it treats you lying to would-be investors about your fraud to raise fresh equity.

“Fraud squared,” or something.

10. Magic Money in a Box was a “Security”😬

SamCoins, ShitCoins, Web3 “tokens,” magic beans. Call em what you want, but they’re entirely fabricated from dreams.

And Sam lied about them.

A lot.

And they “manipulated” the price of $FTT.

And the SEC declares it a security.👀

Quick Aside (unrelated to FTX): if tokens are securities, many, MANY people broke the law. Entrepreneurs, promoters, and - yikes! - prominent venture capitalists. I’d watch out here. We may see VCs in handcuffs…

11. Undocumented Personal Loans in the Billions

If you have your fund “borrow” customer brokerage assets, then “lend” those from your fund to yourself, but you don’t document the loan, is it even a loan? Doesn’t that just make it money laundering?

Say it with me: “RICO.”

12. FTX Customers Withdrew $5 Billion in ONE DAY 😮

It also had history’s all-time least surprising $8 billion shortfall. Oops!

https://twitter.com/compound248/status/1598446656634191872

End:

That’s the SEC civil complaint summary - the criminal complaints will have more.

The most fascinating part to me is the implications beyond FTX’s shores (see the “Quick Aside” before #11).

If you enjoyed, please Like, RT, & Follow.

Here’s an earlier FTX thread. 🙏

https://twitter.com/compound248/status/1598446656634191872

Vibes.

Source to SEC complaint:
sec.gov/litigation/com…

https://twitter.com/compound248/status/1605749962372964352

Here’s what the US Souther District of New York had to say on the matter:

https://twitter.com/compound248/status/1605749962372964352

https://twitter.com/compound248/status/1606002085832466433

Dude 2500x’d his wealth in the last 3-weeks. Legend.

https://twitter.com/compound248/status/1606002085832466433

https://twitter.com/compound248/status/1606005290754838535

Too many people think this is real:

https://twitter.com/compound248/status/1606005290754838535

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Compound248 💰

@compound248

Apr 23

Capital One is a bellwether for the middle-class American consumer.

It sees who is spending what, where, and when.

$COF reported earnings today, providing early data that both supports and challenges the narratives around consumer behavior after Liberation Day.
🧵👇 1/x

2. Consumer Spending

Trends were stable through 3/31, but since then:

- iPhones: very modest consumer electronics "pull forward" $AAPL

- Autos: noteworthy spend uptick as consumers try to "get ahead of tariff impacts."

- Travel & Entertainment: T&E spend "growth" is easing, especially airlines (unclear if this means overall spend is down or it's growing slower)

3. Macro Forecast

Despite Q1 consumer credit performance being above previous expectations, $COF assumes a negative impact in its go-forward modeling and is watching "very very closely" to see if it's being conservative enough.

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Compound248 💰

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Mar 30

Tariffs are Beautiful

We were taught tariffs triggered a spiral into the Great Depression.

That tariffs are inherently inflationary.

But tariffs are just another tax.

As with any tax, it creates a set of incentives.

And, as far as taxes go, tariffs are beautiful.
🧵👇

2. Zoom Out

Governments need revenue to operate.

They overwhelmingly get their revenue by taking it from the people they serve, generally in the form of a tax.

There are better and worse taxes, ipso facto.

3. Avoid Punishing Healthy Behaviors

All taxes create incentives, intended or otherwise.

Incentives change behavior.

We should incentivize prosocial behavior - the actions that lead to a safer, healthier, and more prosperous nation.

What are the key choices?

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Compound248 💰

@compound248

Mar 28

It is hard to know what to make of xAI buying X.

My gut is it smacks of desperation.

On the surface, the deal values @X flat to Twitter’s 2022 takeout value, despite massive underperformance on financial metrics.

Sounds like a win of sorts for X shareholders… 🥇

…BUT
1/x 🧵👇

…it is a stock deal and X owners will now own 29% of combinedco, shifting from a near-pureplay social media bet in a HIGHLY strategic asset to an AI bet that’s very much on the cum plus a diluted share in Twitter.

Yes, xAI is a powerful model.

But not unusually so.
2/x

xAI has de minimis revenue, is hemorrhaging cash, & its prospective business opportunity seems VERY difficult given the relevant competition:

a) has a head start;
b) is murderers row; and
c) has existing business and GTM strategies to build on.
3/x

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Compound248 💰

@compound248

Dec 3, 2024

“Vox populi, vox dei.”

So goes one of Elon’s favorite quotes.

Today we learned while the voice of the people may be the voice of the gods, in Delaware there’s only one true god:

And her name is Chancellor Kathaleen McCormick.
1/x 🧵👇

Below is a brief thread breaking down her denial of Elon’s request for $55 billion in $TSLA stock.

2. Her original January 2024 ruling highlighted several flaws in the years old shareholder vote that was meant to award Elon massive stock compensation, if he delivered massive value to $TSLA shareholders.

Her determination wiped out Musk’s entire equity grant, stating Tesla failed to follow required procedures, which invalidated the original vote from years ago to grant the compensation package.

3. Tesla asked her to review her ruling.

Then, this past summer, Tesla held a new shareholder vote to (re)affirm the prior flawed compensation package.

Today’s 103 page decision responded to that request AND was meant to decide how much the plaintiffs’ lawyers should be paid.

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Compound248 💰

@compound248

Oct 31, 2024

1. $CVNA has 67x'd (!!) in less than 2 yrs, bottoming Dec '22 at $3.72 vs ~$253 today.

I'm sympathetic to the short-seller view, but also was at $10.

Praise Allah, I avoided this career-killer. Despite its sketchy history, it's short-seller death.

That said, inshallah.
🧵👇1/x

2. Last Q, Carvana sold 234k cars. while booking (heavily) Adjusted EBITDA of $429 million.

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A 12% Adj EBITDA margin for a used car retailer!

3. Compare Carvana's 12% Adj EBITDA margin to CarMax.

CarMax operates in the 3-4% range.

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Compound248 💰

@compound248

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Rare footage of Mrs. B - Rose Blumkin.

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Even at 94-years old, she continued to work 70 hour weeks, pricing rugs and carpets from memory. 🧵👇

“We like managers who are in love with their business…who feel like I do - I want to tap dance when I get to the office,” is how Buffett answered Adam Smith’s question about the Berkshire Hathaway culture.
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Mrs B barely spoke English when she started NFM; she sought a $75 business loan and was denied.

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“I still hate them. Anybody who does you dirty, you should never forgive and forget.” ☠️

- Rose Blumkin at 94 years young

Mrs. B had uncommon sense:

“God blessed me: anything I do, I make money.”

Mrs. B’s daughter on growing up:

“The customer was God - that came first and we came next,” she laughingly shared.