Wall Street: How smart money lost on FTX

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10 THINGS ON WALL STREET

Happy hump day. It's Dan DeFrancesco checking in from NYC.

Today we've got stories on private equity making a push to the public cloud, a Goldman settlement exposed, and our list of 100 people transforming business

But first, what else but more FTX!


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Screenshot 2021 06 04 at 12.57.45

1. When the smart people lose.

Amid the implosion of crypto exchange FTX, I'm sure many of you had a similar thought creep into your mind.

How did they not see this coming?

For many impacted by the downfall of Sam Bankman-Fried's crypto empire, the answer is a mixture of a lack of experience and being blinded by healthy returns. People tend to not ask too many questions when the going is good. 

But one group seemingly should have known better.

Insider's Dakin Campbell recently reported on how the so-called "smart money" — aka professional traders — got caught up in the FTX debacle. It's a group that includes many who had navigated previous market-shattering blowups like MF Global and Lehman Brothers. 

The story is a fascinating look into what drew three industry veterans to FTX in the first place, and how they were still impacted despite having what they believed to be sound risk-management practices in place. 

In fact, one trader told Dakin his firm even game planned what would happen if Alameda Research, the trading firm SBF founded that is reportedly at the center of FTX's collapse, blew up. 

What the trader didn't account for is how...unique...FTX would be in its business decision. 

"What we didn't expect or piece together was that the biggest lender of all would be FTX. That would be unfathomable that he would do that — even if your prop shop went down, why would you risk a $32 billion exchange business that prints money?"

Click here to read more about how professional traders got caught up in FTX's blow up.

Since there is still A LOT going on with FTX, I figured I'd do a quick rundown of the rest of the news. If you're fed up with this fiasco, keep scrolling for an FTX-free newsletter. 


In other news:

Derek Jeter.

2. PE is all-in on the public cloud. The latest battleground for public-cloud providers on Wall Street is in private equity. Here's how PE shops are making the move, and leveraging their position to get some nice discounts on pricing.

3. Goldman Sachs reportedly paid out $12 million to a female partner to settle claims of sexism and mistreatment toward women. According to a Bloomberg report, which was disputed as containing "factual errors" by Goldman's general counsel, CEO David Solomon was among the male execs who allegedly made inappropriate comments about women

4. Find out how much Supreme Court judges have in investments. We combed through a new federal database that discloses judicial wealth and potential conflicts. Here's some highlights from the nine Supreme Court judges along with two other judges with unique holdings

5. Check out 100 people transforming business! Insider's annual list highlights leaders across 10 different industries driving change and innovation. We've got the full list here, which includes 10 people focused on money

6. Steve Cohen would prefer if you left the money you invested with him alone. Point72 Asset Management, the hedge fund Cohen founded,  is considering capping client withdrawals, Bloomberg reported.  

7. The layoffs at Amazon have begun. The company is reportedly planning on cutting roughly 10,000 employees. Things are off to a rocky start, as Amazon's email crashed Tuesday, sending many workers into a panic, believing they'd been axed. It's the latest in what has been a frustrating time for Amazon employees, who are upset by leaderships lack of clarity, Insider reports.  

8. Tweet while you can! Employees at Twitter are unsure if the site will even remain operational in the wake of massive layoffs and cuts to infrastructure. Here's why it could all go up in smoke.  

9. Don't be bashful if you lose your job. Turns out sharing you got laid off on social media could be your ticket to a new gig. Here's why it's worth sharing your bad news

10. Take a tour of Derek Jeter's upstate digs. The lake-side castle the New York Yankees legend put on the market four years ago is now reportedly going to auction with an opening bid of $6.5 million. Take a peek inside


Keep updated with the latest business news throughout your day by checking out The Refresh from Insider, a dynamic audio news brief. Listen here.


Edited by Jeffrey Cane (tweet @jeffrey_cane) in New York and Hallam Bullock (tweet @hallam_bullock) in London. 

 

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