FTX Was Not Very Careful
Some more balance sheets, a bankruptcy venue dispute and continued freelance fundraising.
Programming note: Money Stuff will be off tomorrow, back on Monday.
I don’t want to minimize the likelihood of intentional fraud and theft. Stuff seems bad. But I want to say that the story of FTX also reads like what would happen if you and a few of your college friends set up a gigantic international financial exchange after like a year or two of working in finance. Oh, your friends are smart. They have decent intuitions about financial stuff; they have good ideas for what products to trade and how to trade them; they can code up a good-looking website. But do they have hard-won expertise, built up over many years, in accounting controls and business processes for running a giant organization? Are they excited about making sure all the paperwork is correct? No, that stuff is boring. Your friends are traders and engineers, not accountants and compliance officers. Also there just aren’t that many of them, and they are running a huge exchange; they are too busy for paperwork. They move fast and break things. They break so many things.