How the fall of the 'King of Crypto' cost one British man millions

[terminal7]

BBC news article:

https://www.bbc.co.uk/news/technology-66892685

Can someone explain to me why anyone apart from Mr Kavuri is responsible for his own loss?

T7

[ReformedCharacter]

BBC news article:

https://www.bbc.co.uk/news/technology-66892685

Can someone explain to me why anyone apart from Mr Kavuri is responsible for his own loss?

T7

Alleged fraud by Sam Bankman-Fried and his fellow participants. One might liken crypto to gambling, but if your bookie gets wiped out because of fraudulent activities while holding your stake\winnings then you might have reason to hold the bookie responsible.

RC

[Urbandreamer]

BBC news article:

https://www.bbc.co.uk/news/technology-66892685

Can someone explain to me why anyone apart from Mr Kavuri is responsible for his own loss?

T7

Err, doesn't the same apply to those who invested with Mr Madoff.
https://en.wikipedia.org/wiki/Bernie_Madoff

Possibly we should also apply the same logic to all those British Steel pensioners who were ripped off.

I suggest that you rethink your position. We are not talking the likes of those who lost money investing in Luna, who simply made a faulty investment choice. Instead in the case of both Madoff and FTX, we are talking about fraud by a trusted custodian. Are you sure that the mark is always responsible in all cases of fraud.

FWIW I am also a FTX undischarged creditor. I lost about £200, but would be over the moon if they gave me the bitcoin that I purchased with that money. Especially as the value of that bitcoin is now £234.

Neither I not Mr Kavuri are likely to see our crytpo, just as Madoff's investors never received either shares or value after the shares were sold. Because it was a FRAUD!

[Lootman]

Can someone explain to me why anyone apart from Mr Kavuri is responsible for his own loss?

Neither I not Mr Kavuri are likely to see our crytpo, just as Madoff's investors never received either shares or value after the shares were sold. Because it was a FRAUD!

I do not normally agree with T7. But that said I fail to see how you can reasonably have perceived speculating in crypto (with anyone) as being in the same risk league as, say, buying premium bonds or gilts.

Instead you sought out-sized returns from taking out-sized risks. And guess what? - it did not work out.

Get over it, and be grateful you only lost a couple of hundred quid.

[Urbandreamer]

Neither I not Mr Kavuri are likely to see our crytpo, just as Madoff's investors never received either shares or value after the shares were sold. Because it was a FRAUD!

I do not normally agree with T7. But that said I fail to see how you can reasonably have perceived speculating in crypto (with anyone) as being in the same risk league as, say, buying premium bonds or gilts.

Instead you sought out-sized returns from taking out-sized risks. And guess what? - it did not work out.

Get over it, and be grateful you only lost a couple of hundred quid.

You can't understand, because that was not my position!
Lootman, did you miss the point in my post that, had FTX actually given me the bitcoin I paid for it would have "worked out".

IF he lost the "money" speculating then YES it would be his fault. IF he contracts with a company to buy an asset for him and they do not?

I should be "grateful" that I only suffered a small theft? The reason that I only lost such a small amount is that while unlucky with timing, I was careful. I gave them the money, bought the bitcoin and within 7 days they blew up. It's likely that my previous purchases (multiple lumps of £200) were actually paid out with bitcoin purchased with the likes of Mr Kavuri's money. I suspect that FTX held all his assets.

T7 asked how could it be the fault of anyone else. I pointed out that Mr Kavuri didn't cause FTX to act the way that they did. Only their management were responsible for how they acted.

Ps, I currently use Coinbase. I actually have bitcoin worth about £50 at risk with them, having withdrawn most bitcoin purchases quickly.

[murraypaul]

Lootman, did you miss the point in my post that, had FTX actually given me the bitcoin I paid for it would have "worked out".

If the Nigerian Prince had sent the money he promised, I'd be a millionaire!

If that a fair comparison? No, obviously not. Is it a little bit fair? Yes.

Plenty of people recognised the crypto 'banks' for the obvious scams they were long before they collapsed.

They were creating money out of thin air backed by nothing, and swapping it back and forth between themselves. But then that is crypto in a nutshell.

You chose to step outside the regulated industry, outside FSCS protection.

[Urbandreamer]

Lootman, did you miss the point in my post that, had FTX actually given me the bitcoin I paid for it would have "worked out".

If the Nigerian Prince had sent the money he promised, I'd be a millionaire!

If that a fair comparison? No, obviously not. Is it a little bit fair? Yes.

Plenty of people recognised the crypto 'banks' for the obvious scams they were long before they collapsed.

They were creating money out of thin air backed by nothing, and swapping it back and forth between themselves. But then that is crypto in a nutshell.

You chose to step outside the regulated industry, outside FSCS protection.

Just out of curiosity, where do you think the pound or dollar is mined? Are they not created out of "thin air"? What the hell is QE and how can we have an increase in the money supply?

The dollar is backed by god. It says so on the back. "In God we trust".
The pound is a promise to pay, or that's what is printed on the notes. But to pay what and who can you demand that thing from?

Now SBF is currently in prison awaiting trial. Why? After all, what he did was not covered by FSCS, just as buying or selling a horse is not.
However we do seem to have drifted a bit from Mr Kavuri's responsibility for SBF's actions.

For what it's worth, bitcoin is of limited supply and not created out of thin air. Many who dislike it complain about the energy that has to be used to "mine" it. "Creating" extra bitcoin costs and it will cost MORE sometime next year. Eventually the ability to "create" it will cease, by design. At that point it will have to be fully paid for by a transaction fee, rather than partially as now.

Of course there are other crypto currencies, just as there are other fiat currencies. Possibly we could lump all fiat in with the Bolivar, and all crypto with Pepe, if we are to be silly.

[murraypaul]

The pound is a promise by the UK government.

FTT, CEL, VGX, etc.. are a promise by a crypto exchange.

Turns out, one of those promises is worth more than the others.

But those tokens, backed by promises with zero value, were traded back and worth between the exchanges and booked on the balance sheet as though they had actual value. And as soon as that premise was tested, it was found to be obviously false, and the house of cards collapsed.

Now SBF is currently in prison awaiting trial. Why?

Because he did naughty things with actual real money.

Specifically he diverted USD that customers sent to one company to a different one.

That is why he is having the book thrown at him, he committed crimes with real money rather than fake money.

Of course there are other crypto currencies, just as there are other fiat currencies

Yes, that was the point I was making. The exchanges didn't fail because of Bitcoin, or Ethereum.

[GoSeigen]

fraud by a trusted custodian

ROFL. There we were being told that it was a trustless system, no reliance on dodgy bankers. Evidently not...

GS

[ignotus20]

ROFL. There we were being told that it was a trustless system, no reliance on dodgy bankers. Evidently not...

GS

It is a trustless system, but if you decide to place your digital assets with an intermediary who require you to trust them then, ipso facto, it isn't trustless any longer

[ignotus20]

I haven't studied this article in a great deal of depth, but it does come across as (yet another) crypto cautionary tale intended to put people off investing in it, arguably with good reason.

The fellow concerned doesn't appear to be financially unsophisticated (far from it). The advice generally offered is that you shouldn't keep substantial amounts of BTC, or other crypto digital assets on exchanges because this introduces an intermediary who can act fraudulently or become victims of hack attempts etc. You move them to 'cold' storage and make sure that they are physically secured. Crypto could be compared with bearer bonds, in this respect.

In the sense that he has had property he owned stolen from him, I feel some empathy, but as well choosing a risky investment, he has compounded that risk by not looking after his assets as diligently as he could (and should) have.

Whether investing into crypto is a wise idea or not is besides the point. A rough analogy would be getting your South Sea Company stock stolen. You might ultimately have lost it all anyway when the firm collapsed, but you wouldn't know know that in advance and, critically, the choice whether or not to sell has been taken away from you.