I was completely ignoring the entire FTX/Sam Bankman-Fried (SBF) story until a friend shared a Matt Levine column on it with me, and now I am completely hooked and simply cannot stop reading about it. This guy literally did provide a “balance sheet” to his investors that included a line item called “HIDDEN POORLY INTERNALLY LABELED ACCOUNT.”
The Levine piece is behind Bloomberg’s paywall but includes gems like:
If you try to calculate the equity of a balance sheet with an entry for HIDDEN POORLY INTERNALLY LABELED ACCOUNT, Microsoft Clippy will appear before you in the flesh, bloodshot and staggering, with a knife in his little paper-clip hand, saying “just what do you think you’re doing Dave?” You cannot apply ordinary arithmetic to numbers in a cell labeled “HIDDEN POORLY INTERNALLY LABELED ACCOUNT.” The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison.
I mean, the entry is “-8,000,000,000.” Below that is an entry for “withdrawals on Sunday” of “5,000,000,000.” These are *bizarrely* round numbers. I suppose that if you’re siphoning off $8 billion to your affiliated trading firm in a hidden account, you might siphon off a round $8 billion, but lots of uncoordinated customer withdrawals are not going to add up to exactly $5 billion even. The point here is that FTX appears to have had no real accounting system for customer withdrawals? Just sort of take a guess and chuck it in an Excel sheet?
But even better than this is that John Ray, the interim CEO appointed to oversee FTX’s bankruptcy restructuring, filed his first declaration with the court this week. Reader, it is a banger.
On the very first page, Ray reminds the court that he handled Enron, and a long list of other financial malfeasance disasters, which means (I paraphrase) he has Seen Some Shit. And yet, he says, he has never seen shit like This Shit.
- SBF was lending FTX and Alameda money to… himself.
- FTX had been valuing certain crypto holdings (the tokens it had created itself) at $5.5 billion but their actual value is less than $1 million.
- There doesn’t seem to be an accurate list of bank accounts and signers.
- There doesn’t seem to be an accounting department.
- The procedure for authorizing a disbursement of funds seems to be that a request was made in a Slack or Discord channel designated for that purpose, and then authorizers would post with their personalized reaction emoji. 😱
I realize that real people lost their savings in this scam, and it’s important to be empathetic to that, but SBF is in such deep 💩 that it’s hard to NOT be entertained at watching the depths of the incompetence come out here. It’s not just the criminality, it’s that they were so bad at criminality, but meanwhile large institutional investors were falling all over themselves to hand billions of dollars to people who did not employ an accountant.
I’ve been listening to some of Apple Music’s algorithmically generated playlists lately; they take what I’ve been listening to and try to extrapolate what I might like to hear both from my own library and from songs I don’t know. My Get Up! mix recently surfaced this one and it’s been stuck in my head all week:
Twitter. What is there even to say about it? Casey Newton and Zoë Schiffer have been all over the various poorly-considered layoffs, the internal toxicity, the paranoia, the half-baked product ideas, the backfiring ultimatums… Entire engineering teams, moderation teams, the payroll department, gone either from a capricious layoff or a mass resignation event.
Personally, I think it’s highly likely that Twitter experiences a serious outage this weekend during the World Cup that it can’t quickly recover from, because a system as complex as Twitter needs to be managed by people that understand it. You can’t just call an outsourced IT consultant with Twitter goes down.
And it makes me sad. I referred to Twitter as a “hellsite” like everyone else, and it’s true that the algorithm does tend to encourage doom scrolling and outrage. But I have been on Twitter for 15 years, since before images and GIFs and @ replies and even hashtags. My username is ‘
tiffany,’ for crying out loud. I’ve met many of my best friends on Twitter. It has been a huge part of my adult life and the voices I encountered there have challenged my thinking in a thousand ways. I’m frustrated at the prospect of losing it because of a wealthy man’s ego and paranoia.
So despite my dabbling in Mastodon, I will be shitposting on Twitter until they unplug the servers from the wall.
Anne Helen Petersen’s Culture Study featured an interview this week with Adrian Hon about the negative impacts of gamification as a strategy for making digital products “sticky.” It hit home with me as I’ve found myself fighting off sleep but trying to squeeze in a Duolingo lesson to keep my streak alive some nights.
N.B: The game Adrian describes for A.I. is the game I was playing when I met Tom. We are not the only couple to have gotten together from that game, and we are still tight with a number of other players, many of whom have also found their lives radically altered (for the better!) for having played it. So it delighted me to see Adrian show up in a newsletter I read religiously.
Since we’re talking about finding new internet homes… maybe it’s time for me to revive my Twitch channel?