[ExI] lotta splainin to do

[Stuart LaForge]

Hi Spike for some reason the server keeps bouncing this back to me as  
spam. Please forward to the list. Thanks.

Quoting Spike:

> I keep hearing of this FTX digital money exchange, but I don't understand
> it.  Some news agencies are reporting that it was looted by someone,
> possibly an insider, but that makes no sense because the main selling point
> of bitcoin was that ownership is maintained by blockchain, which is said to
> be inherently secure.  So. this looter, what did she steal?  Digital
> currency?  Or did FTX have a huge pile of paper currency, and if so, why did
> FXT have a huge pile of cash when inflation is at 8%?
> But if they did, was that cash in a safe, then some sneaky scoundrel with
> the combination hauled away the loot in the back of a very sturdy
> heavily-loaded delivery truck?  A USA bill has about 1g mass, so a million
> bills is a ton, so even if all that moola was in the largest American bill,
> the 100, we are still talking 4 tons of currency said to be missing and that
> just doesn't sound like something that would be easily carted away.  It
> would be a heeellll of a job just loading the truck.  But if it is digital
> currency which was stolen, how can they suppose the looter somehow got away
> with 400 megabucks?
> This story makes no sense to me.  A puzzled rocket scientist I am.
> Adrian or some of you other hep cats, do explain please.


The reason the the FTX saga makes so little sense is that people are
still trying to see it as some sort of failed business enterprise.

Near as I can tell based on the following bankruptcy filing by John J.
Ray III (the guy who oversaw Enron's bankruptcy case) the company was
never meant to be viable and was designed from the ground up to be an
inscrutable scam meant to defraud investors, funnel money to Sam
Bankman-Fried and his cronies, and avoid any accountability or
transparency. It was all just an elaborate shell game using other
people's money for personal gain.

https://s3.documentcloud.org/documents/23310507/ftx-bankruptcy-filing-john-j-ray-iii.pdf

Interesting excerpts include the following items:

4. I have over 40 years of legal and restructuring experience. I have been the
Chief Restructuring Officer or Chief Executive Officer in several of
the largest corporate failures
in history. I have supervised situations involving allegations of
criminal activity and
malfeasance (Enron). I have supervised situations involving novel
financial structures (Enron
and Residential Capital) and cross-border asset recovery and
maximization (Nortel and Overseas
Shipholding). Nearly every situation in which I have been involved has
been characterized by
defects of some sort in internal controls, regulatory compliance,
human resources and systems
integrity.

5. Never in my career have I seen such a complete failure of corporate
controls and such a complete absence of trustworthy financial
information as occurred here.
   From compromised systems integrity and faulty regulatory oversight
abroad, to the concentration
of control in the hands of a very small group of inexperienced,
unsophisticated and potentially
compromised individuals, this situation is unprecedented.

46. Many of the companies in the FTX Group, especially those organized in
Antigua and the Bahamas, did not have appropriate corporate
governance. I understand that
many entities, for example, never had board meetings

50. The FTX Group did not maintain centralized control of its cash. Cash
management procedural failures included the absence of an accurate
list of bank accounts and
account signatories, as well as insufficient attention to the
creditworthiness of banking partners
around the world. Under my direction, the Debtors are establishing a
centralized cash
management system with proper controls and reporting mechanisms.

59. The FTX Group’s approach to human resources combined employees of
various entities and outside contractors, with unclear records and
lines of responsibility. At this time, the Debtors have been unable to
prepare a complete list of who worked for the FTX Group as of the
Petition Date, or the terms of their employment. Repeated attempts to
locate certain presumed employees to confirm their status have been
unsuccessful to date.

62. The Debtors did not have the type of disbursement controls that I believe
are appropriate for a business enterprise. For example, employees of
the FTX Group submitted
payment requests through an on-line ‘chat’ platform where a disparate
group of supervisors
approved disbursements by responding with personalized emojis.

71. One of the most pervasive failures of the FTX.com business in particular
is the absence of lasting records of decision-making. Mr.
Bankman-Fried often communicated
by using applications that were set to auto-delete after a short
period of time, and encouraged
employees to do the same.

Sam Bankman-Fried is like the Bernie Madhoff of cryptocurrency.

Stuart LaForge