A great blog post re FTX by Watching the Herd


The facts emerging from the multi-billion dollar fraud perpetrated by FTX and its shell companies are not looking good for the gang of nerds who concocted the system and executed the embezzlement. But the facts are also not looking good for Congress and particularly not good for the elite universities that granted degrees and status to those committing the crimes and those in charge of properly regulating such firms to prevent billion dollar frauds from occurring.

Much, much more at the link.

Many of you will remember WTH from the old boards.


The biggest problem the schools face is a basic one: They can award a person a degree upon completion of required classes, etc to earn that degree. BUT, once graduated, there is no way any school can compel the former student to comply with what they were taught at the school–or with the law. In fact, one of the major objectives of many graduates is to TRY to figure how to NOT to break the law–but still be allowed to keep ill-gotten gains (from any/all sources).

1 Like

You wouldn’t want them to, really, otherwise industry, law, and society would stultify with whatever people learned 20 years ago. Education is supposed to get people to think, to solve problems that have not been seen before, not to uselessly parrot what their ancestors learned. That’s how religion works, not education.

But with either, as we have seen, bad actors can corrupt the process and do. So we need to be vigilant and take those people down.


This is completely wrong. Universities can, and do, rescind degrees of graduates - who bring the university’s name into substantial disrepute via criminal activity, or who are subsequently discovered to have cheated to achieve their qualification, for example.

This applies to all degrees, including honorary ones. For example, if a person were to lead a violent coup attempt against their own country, they might well lose their university degree.


I understand being able to rescind an honorary degree. Also a degree fraudulently obtained. But a degree that was properly awarded is not really eligible to be rescinded because it was legitimately earned.

1 Like

No. One of the topics usually taught is ethics for the profession and towards others (specifically, their clients/customers/society). Choosing to violate those ethics because there is no penalty for doing so indicates a serious moral flaw in the person/people who do it.


There were no ethics courses taught in my colleges that I recall. And there were no such things where there was even a chapter devoted to those topics, I’m pretty sure. I was in Engineering, and for a short time in Economics, which also included courses in Law before finally winding up in Speech, Radio/TV.

It seems to me that if you have earned a degree by whatever standards the University dictates at the time it is yours, and not cancellable due to your subsequent behavior. They may rail against it/you and may even call you out, but I don’t think a degree, legitimately earned, can be recalled.

There are professional societies which might cause you to stop practicing a profession (Medical, Law come to mind, and I’m sure there are permitting societies for certain levels of engineering) and those may be cancelled for malfeasance, but the college degree, I don’t think so.


Weed alert.
This is your only warning.


Legal is how you act when the cop, judge, DoJ, FBI, etc is watching.

Moral is how you act when your cult is watching.

Ethical is how you act when no one is watching.


Colleges and universities mostly teach the legalities that affect us.
(This is the tenuous tie in to this thread topic?) Magic mushrooms are legal in Colorado, but illegal in TX.
Dumping toxic chemicals in the environment is illegal in the US, so companies moved processing to China, Indonesia, etc.

Religion, family units, gangs, associations, nationality, ethnicity, etc teach morals that support THEIR DESIRED social stability.
Sharia law? Jehovah’s witness, Mormon rules? Kill for your gang rules? Prescribe high sugar and low fat cause the USDA and AMA push that diet?

Ethics. Wisdom literature? Spiritual leaders? Just the process of gaining experience, or maybe just getting old?
Where did SBF and gang get his/their ethics?

Yes, there are overlaps between each category, and where the attribute is “learned”.

Wisdom literature and leaders often teach Ethics by referring to the Golden Rule, Silver Rule, and perhaps the Platinum Rule.

Golden Rule.
Treat others the way you want to be treated.

Silver Rule.
Do NOT do to others, that which you do NOT want done to you.

Platinum Rule.
Treat others the way THEY want to be treated. (Ie, understand THEIR culture).

The Platinum Rule is being demanded by the “Woke” cult?

End weed alert?
ralph actually tries to do the Platinum Rule. All the while demanding reciprocity.

Weed alert:
Legal and Moral can be corrupted by bribes and power. See shiny land and organized religion.

Legal and Moral involve value judgement. Good Bad; right wrong.

Ethics? We tend to think of ethics as “good”. Were Stalin’s ethics “good”? … For Ukraine?
Mother Teresa? Gandhi? Be aware there are naysayers.

My point in addressing the education / pedigree angle is that there was a consistent effort on the part of SBF and others to rely upon ties of their parents to various regulatory players to grease the skids on proposed regulatory terms that would minimize such impacts on FTX. The LA Times has a report

itemizing all of the first and second tier personnel at the CFTC, SEC, etc. contacted by FTX or hired by FTX to lobby those entities:

Ryne Miller – FTX general counsel – previous counsel to Gary Gensler when he was at CFTC
Mark Wetjen – FTX head of policy / regulatory strategy – former acting chair and commissioner at CFTC
Jill Sommers – member of FTX’s “Derivative Board of Directors” - former commissioner at CFTC
Dan Berkowitz – current general counsel at SEC – had private dinner with SBF in Oct 2021
Dawn Stump – former CFTC commissioner – was asked to attend a private Nov 2021 dinner

It seems obvious those relationships and pedigrees provided some “cloak of legitimacy” to the firm’s real underlying function and deferred recognition of the overall fraud by MONTHS. This surely allowed the con to extend to not only more $30,000 saps like the Patriots fan now suing Tom Brady for shilling for the company but firms like Sequoia Capital who lost $210 million of THEIR customers’ money by giving it to FTX.

As multiple people noted, obtaining a degree from an elite university doesn’t guarantee the graduate was exposed to ethics training or would actually use it in their career. But that’s not the most important point either. The real point is that having such a degree from a prestigious university doesn’t seem to be much of a guarantee of one’s pure intellectual ability to spot such a con, even for those with degrees in the law, finance or engineering / math. SBF and cohorts may have been 100% crooks but he was pitching to dozens of highly paid “professionals” responsible for managing other peoples’ money who were either too stupid to spot the con or were equally unethical and too greedy to pass up a short-term good thing. Either way, not a good look for their illustrious alma maters.

It does raise the question of whether a professional discipline DOES need to be created in the realm of “fintech” – the blend of finance and software behind what seems to be 70% of financial markets and probably behind where 95% of the risk lies. There ARE professional certifications for civil engineers and construction engineers tied to “public works” projects like bridges and skycrapers whose catastrophic failure stemming from shoddy work can kill people. There need to be minimum technical / ethical standards devised that are derived from both existing GAAP accounting principles and non-existent software engineering and security standards. Otherwise, financial markets will prove to be a continuous cycle of implosions every 10-15 years as techno-grifters devise new versions of three-card monte that become intertwined with the core of the worldwide financial system.



The professional ability to spot a con is found in the oft-maligned accounting profession. We are the only ones trained and required to have experience in financial auditing. Not all cons can be caught with normal auditing techniques, but many are.

In particular, FTX seems to have commingled customer assets with the business’s assets. That is a huge problem, and one that an auditor of a company like FTX should specifically check for and spot without too much difficulty.

Of course, being organized in Antigua and Barbuda in the Caribbean, it’s not a US company and not subject to US company audits. I have no idea what audits were done, if any.

But this should be a lesson to anyone investing with any financial company. Find out where they are located - not just an office, but the country in which they are organized. This is incredibly important for any on-line transactions. If they are not organized under US law, you may not have any protections under US law. The only protections may be those of the country where the company is legally organized.



Just did a bit of poking around for more details on FTX. It appears there is a US CPA firm that audited FTX. Or at least that is a claim made by Sam. The CPA firm isn’t commenting. But the Public Company Accounting Oversight Board (PCAOB) has found deficiencies in that firm’s audits of four other publicly held companies. Just an interesting bit of info.

A report in August by the Public Company Accounting Oversight Board, regulator of the US audit profession, said its inspectors found deficiencies in all four of the public company audits carried out by Prager Metis that they looked at. The firm told the PCAOB it was working to fix the issues.


1 Like

WTH, great blog, I check in every so often to see if you have something new up. Nice work !

1 Like

One reference I saw regarding FTX’s auditor was that the only reference to a contact that could be found was a metaverse screen name / handle.

Other stories involving the plea deals for Caroline Ellison and Gary Wang indicate the entire back office was coded by only 4-5 people including Gary Wang and that changes were checked in that allowed transfers OUT of accounts without actually logging the change… There goes yer blockchain integrity… We’ll just arbitrarily NOT update the chain when someone logs in as root and REALLY REALLY needs assets.

Seems pretty clear there weren’t “deficiencies” found by any audits, there were no remotely legitimate audits. As noted upthread, be careful what you ask for… If you want to keep millions of dollars with a firm operating outside the reach of meddlesome, inefficient, pesky US regulations, you might really appreciate them after the fact after losing everything.



Jerry, your claim has been proven wrong and I fear we are now entering a ‘game’ where I prove your claims wrong with examples, then you treat the counterexamples as special cases rather than proof that your core belief was wrong - then ‘shift the goalposts’ by pretending you actually claimed/believed something else instead, which would exclude the counterexamples.

That’s a game that can be played forever and it’s completely pointless. If you want to claim that degrees cannot be revoked, ‘put up or shut up’, I want to see legal proof to support your view. Put up, please.

In the meantime I’m going to provide further examples of cases and law that show your claim is totally misfounded.

Your initial claim was this:

“BUT, once graduated, there is no way any school can compel the former student to comply with what they were taught at the school–or with the law.”

I mean the honorary degree example alone is enough to fully prove the point.

You appear to be mistaking 'something that very rarely happens for ‘something that can’t happen at all’ based on your imagination. A degree is not a physical possession; it’s an ongoing recognition by a body. The body can remove that recognition, subject to internal processes and thus generally not subject to law. (though attempts have been made to undo degree revocation using law, it is rarely successful - the n-a-_-i example below being the only one I’m familiar with).

Some more examples:

The n-a-_-is famously revoked the academic degrees of Jews. Not only in Germany. (https://news.uga.edu/polish-university-reinstates-degrees-earned-by-german-jews-in-ni-era/). 260 people affected at this Polish university for 80 years. (That’s how difficult it is to challenge revocation.)

(edit: incredibly, I am not allowed to use the word n-a-_-i with a normal spelling on this forum in a discussion of history. I can’t even post a URL to a university website that contains the word in the url; you’ll need to edit ‘ni’ into the full word.)

Revocation can be for academic misconduct AFTER graduating and unrelated to the degree itself - anything that brings the university’s reputation into disrepute is sufficient.

For example if you graduated from a German university, as many Americans do, you can have your PhD revoked if you commit a crime intentionally that results in 1 year in prison, or willfully misuse your scientific qualification.

Here’s a case in Germany where the matter was subsequently tested in their supreme court as a challenge under the Germany Constitution. The act being punished had taken place after the person had graduated, left Germany and began working in the US for a few years - so post-degree, and in another country. The court upheld that the university has the absolute right to withdraw the degree for damaging the reputation of the university or of science generally.


Another example here, in the USA; a religious US university, the guy posed for a calendar. This revocation occurred after completing all degree requirements and attending graduation.


Another example here - an Malawian women was frustrated that her degree wasn’t helping her find work so she burned it for a social media video. The university responded to their name being brought into disrepute by revoking her bachelors degree.


Here’s an American legal practice’s take on the topic:


The degree is not simply something paid for and earned once, for the graduate to keep ever after. The degree is instead a continuing certification by the school. Graduates may face scrutiny, sanctions, and serious repercussions years after graduation.”

"Schools have several reasons to revoke degrees, including that degree revocation:

  • protects the integrity of the institution and its degrees;

  • ensures other graduates that employers and the public continue to respect that they legitimately earned their degree;"

To forestall: ‘But this is AMERICA’

Bill Cosby (50 times!), Trump. You just need to bring shame on the university extremely publicly. Some more examples: Mugabe had an honorary degree revoked from two US universities.

Keep in mind too that honorary degrees are real degrees, and while it is not always the case, many are awarded as recognition of experience or achievement in a field where it is considered equal to a degree and that achievement is accepted in place of statuatory requirements of a degree. For example, an honorary doctoral degree may be awarded on the basis of consideration of a portfolio of the person’s work during their career. (particularly in the UK, Australia, and New Zealand)

To give a well-known example of this: Benjamin Franklin received two honorary doctorates for scientific accomplishments, on from St Andrews and one from Oxford.


These are all facts, and your core belief is wrong. Sorry. It’s just how it is. I really don’t have time to keep playing this game any further; the onus is now upon you to provide proof that none of these examples happened or could have happened.

The reason we don’t see it often isn’t because it can’t be done, but simply because the bar is very high.


Nice try, but not a valid answer. The degree was legitimately earned and awarded. Discussion over. Retroactively “unawarding” any degree is an after-the-fact attempt by the institution to cover their butts–which failed.

1 Like

Nice try, but not a valid answer.

Well if you want to go and tell the German Supreme Court they are wrong, to pick one example I gave, I wish you the best of luck.

The degree was legitimately earned and awarded.

All degrees are awarded subject to conduct, not only by passing exams. Requirements of professional conduct can and do extend long past graduation (source: me, an academic who served at multiple universities in different countries). As my examples proved.

Do you accept the (sourced) facts I presented are real?

Do you realise you are completely failing to present any evidence or facts whatsoever to support your own view?

I mean for goodness sake! I just quoted a Supreme Court decision in Germany, and a US legal practice specializing in this topic.