We were shocked and immensely saddened to learn of the recent events at FTX. Our hearts go out to the thousands of FTX customers whose finances may have been jeopardized or destroyed.
We are now unable to perform our work or process grants, and we have fundamental questions about the legitimacy and integrity of the business operations that were funding the FTX Foundation and the Future Fund. As a result, we resigned earlier today.
We don’t yet have a full picture of what went wrong, and we are following the news online as it unfolds. But to the extent that the leadership of FTX may have engaged in deception or dishonesty, we condemn that behavior in the strongest possible terms. We believe that being a good actor in the world means striving to act with honesty and integrity.
We are devastated to say that it looks likely that there are many committed grants that the Future Fund will be unable to honor. We are so sorry that it has come to this. We are no longer employed by the Future Fund, but, in our personal capacities, we are exploring ways to help with this awful situation. We joined the Future Fund to support incredible people and projects, and this outcome is heartbreaking to us.
We appreciate the grantees' work to help build a better future, and we have been honored to support it. We're sorry that we won't be able to continue to do so going forward, and we deeply regret the difficult, painful, and stressful position that many of you are now in.
To reach us, grantees may email grantee-reachout@googlegroups.com. We know grantees must have many questions, and in our personal capacities we will try to answer them as best as we can given the circumstances.
Nick Beckstead
Leopold Aschenbrenner
Avital Balwit
Ketan Ramakrishnan
Will MacAskill
I don't mind sharing a bit about this. SBF desperately wanted to do the Korea arb, and we spent quite a bit of time coming up with any number of outlandish tactics that might enable us to do so, but we were never able to actually figure it out. The capital controls worked. The best we could do was predict which direction the premium would go and trade into KRW and then back out of it accordingly.
Japan was different. We were able to get a Japanese entity set up, and we did successfully trade on the Japan arb. As far as I know we didn't break any laws in doing so, but I wasn't directly involved in the operational side of it. My recollection is that we made something like 10-30 million dollars (~90%CI) off of that arb in total, but I'm not at all confident on the exact amount.
Is that what created his early wealth, though? Not really. Before we all left, pretty much all of that profit had been lost to a series of bad trades and mismanagement of assets. Examples included some number of millions lost to a large directional bet on ETH (that Sam made directly counter to the predictions of our best event trader), a few million more on a large OTC trade in some illiquid shitcoin that crashed long before we could get out of it, another couple million in a series of XRP transfers that nobody noticed had never arrived, and that had fallen in value by something like 90% when they finally showed up much later, and various other random small things like a junior trader accidentally transferring half a million dollars of USDT to a BTC address (or something like that) due to a complete lack of safeguards on transfers, etc. Not to mention absurd levels of expenditures, e.g. an AWS bill that at one point reached about a quarter million dollars per month.
My knowledge of the story ends when we left, and my recollection is that at that point the Japan arb had long been closed and most of our profits from it had been squandered. I don't know how he achieved his later success, but if I were to guess, I'd say it probably has a lot more to do with setting up FTX, launching highly predatory instruments like leveraged ETF tokens on it, and doing similarly shady stuff to the things that brought it all crashing down, but during a bull market that made all of those risks pay off. That's entirely guesswork though, I have no inside knowledge about anything that happened after April 2018.
Note: All of this is purely from memory, I have not cross-checked it with anyone else who was there, and it could be substantially wrong in the details. It has been a long time, and I spent most of that time trying to forget all about it. I'm sharing this because I believe the broad strokes of it to be accurate, but please do not update too strongly from it, nor quote it without mentioning this disclaimer.