I get its criminal what SBF did and this is as bad as negligence gets in business but everyone is treating this like some overt Madoff like scam that was obvious to everyone in-the-know. The details of how SBF himself was engaging in the scam is not even yet set in stone, besides some real estate deals and an obvious lack of corporate controls/conflict of interest, so accusing others of also being a part of it seeems pretty brash and far too early.

Although I get the emotional outrage angle of none of the power players calling it out sooner or asking tough questions. But that's slightly different than participating in a scam.

FUD doesn't help us stop this in the future. Actually accusing them of the things they did is how you get them to fix that mistake in the future. Accusing them of being overt scammers, before we have any actual evidence of that, is how you get completely ignored as being hysterical.

Yes.

The investors might not have committed any crimes, but they bear some moral culpability for this debacle.

And to be clear I am not defending SBF at all. But on the scale of crimes, what he did is less bad than literally any violent crime.

So [established financial player in old school finance job put on high risk desk] sees crypto as a chance to 10-100x BUT they just have to time it right. So all they have to do is basically play the lottery that their hundred plus million investment will have IPOd or got acquired by a bigger fish... all before a) anyone figures out the company is a fully worthless or b) the whole value was based on other companies falsely pumping up crypto. So they simply bet no one would notice in the next 5-10yrs before the stock gets converted or maybe a loan gets paid back.

And their risk/management team signed off on it?

And how do they estimate how long no one will notice or care? Or do you think they have other bullshit companies lined up to acquire it or the IPO market wouldnt check either?

Why wouldn't they just buy FTX coins or similar tokens for such a blatant pump scheme? Why make a long term bet on the actually company cashing out before anyone checks their books?

I don't mean to paint with too broad a brush here. The majority of investment managers are ethical and responsible. But there are always some bad actors, which we now see all around FTX.

Maybe I'm confused but even "dumb money" doesn't typically buy billion dollar scams at IPO where their financials are arranged by Goldman Sachs et al. Unless I missed some obvious examples in recent history where a bullshit (let alone crypto tier bullshit) tech company IPOd with hundreds of millions invested by legit Sequia/OTPP style investors and then the whole charade got exposed after the fact.

You could maybe point to a tiny set of VC companies in history, like Groupon where the stock price was overvalued at IPO, but even they are still a real business with 4000 employees 11 years later.

If anything you could say the grand conspiracy was betting on an acquirer buying them before crypto went bust. But I highly doubt that was a key part of some calculated plan.

Why is it so hard to believe they thought there was real longterm value in the business? It seemed on paper like they were making revenue for legit sources and successfully hid their relationships/high risk bets elsewhere?

It's just ridiculous that the whole fraud seems like it could have been revealed by just sending a (not even specialized in crypto !) accountant to either FTX or Alameda, and the """sophisticated""" investors (and worse : US banking """regulators""") failed to to so !

P.S.: And this is also where the defense of SBF comes in : he's pretty young, focused on "moving fast and breaking things", so of course he would have been emboldened by the above, and might not have realized just how criminal his doings were ??

Stealing and wasting billions is definitely worse than many violent crimes.

It's cryptocurrency. Of course it was obviously a scam to anyone who's bothering to pay attention.

I think a little talked about part of the crypto investment boom among "normies" is that a lot of those people felt completely left behind by capitalism, constantly underwater financially, with no way to catchup or reach financial security. Crypto then got sold to them by the grifters and media as a way out, an amazing, full proof chance to get free. Theres a reason they were paying people Matt Damon and Larry David to do their commercials. Yes, putting your life savings in crypto is obviously a hugely risky and bad idea but most people lack the financial education necessary to recognize that a project promising you 20% APY is unsustainable and even those that do may still go for it because they see it as their one chance to stop drowning.

These aren't ancap millionaires living in the Bahamas, rubbing elbows with politicians and flaunting their $150k NFTs on Twitter, its people like my friend whos a single dad trying to raise two kids with autism while dealing with chronic health issues from his military service who lost most of his (negligible) savings when Celsius blew up. Yes, I'd been telling him for years how he shouldn't be taking risks on stuff like this and how they are all obviously scams and yes he was really stupid for not listening to me and everyone else and he does deserve some blame for his decisions but he wasn't in it for evil or greedy reasons. Dude just wanted to be able to afford counseling services for his kids and got tricked into giving people like SBF his money in hopes of being able to do so and is completely fucked now as a result.

I'm possibly being too empathetic and willing to remove blame from people who made bad choices due to hard circumstances (maybe because I have such a close anecdote). I guess I just feel like theres a large number of the victims that were the suckers the grifters were siphoning money away from and the impact on those people isn't really being discussed.