Could Sam Bankman-Fried go to prison for the FTX disaster? | Hacker News Reader

Could Sam Bankman-Fried go to prison for the FTX disaster?

fortune.com

26 pointsabriosi33 comments

If you do something with money, or the internet there is a law somewhere in the US codex that you are breaking. So yes, of course he could.

The US, rightly or wrongly, tries and often succeeds in enforcing it's laws internationally. Even in cases NOT involving US persons and with no apparent victims. So there is no reason to think this would be different. And that is ignoring the fact that FTX has (had?) a sub-venue called "FTX US" specifically for US persons, which has also failed.

Also, there are a whole bunch of crimes (including wire fraud) where the definition of the crime makes intent so low, it is no barrier to prosecution. This is why you often see major frauds charged as more minor crimes: Fraud requires intent, Wire Fraud just requires a lie, a phone line and some profit.

If he did, I think it'd be the first time a top 3 Democrat donor goes to prison. If I had to make a guess, I'd imagine the current government which he helped fund will be kind to him.

Did you even bother to google something like "Top democratic donor jailed" before posting this?

Of course, there is the exception Harvey Weinstein. But his situation was difficult to sugar-coat.

If he's arrested I wouldn't be surprised if the guards that are supposed to enforce the suicide watch take a long break and come back to find him dead.

He absolutely should but he's friends with too many rich and powerful people. His mother is connected deeply with the Biden Administration. Sam was very close to Bill Clinton and Tony Blair. FTX had articles on them by the WEF.

"showed up at the same party" is not "very close".

It's the new right wing boogeyman - crypto and Dem evil! Collusion!

> Sam was very close to Bill Clinton and Tony Blair

So were Jeffrey Epstein and Ghislane Maxwell - it didn't save them.

They gained mass media attention.

What is the point in throwing someone who didn't commit violent crimes in prison? Punishment? Vengeance?

Yes, punishment, which, in part serves as an example to others that this is absolutely unacceptable practice, and our society cannot allow it to happen. “CEO Sam Bankman-Fried used customer funds from the exchange to plug losses in his failing crypto empire.” it is very well known this is illegal and unethical behavior. No mistakes were made here, it’s outright, decisive fraud.

If an executive of a business willfully, miss manages customers money, for example in a Ponzi scheme, that has repercussions that can damage a chain of people, some of which did not directly invest.

What would you suggest happens to people like this guy and Bernie Madoff instead? A strong, talking to?

I don't know exactly, but of what use is prison in this case besides inflicting unnecessary suffering? There probably is no hand-wavy answer to this, but surely it is possible to come up with sufficient civic restrictions on him to prevent him from committing similar types of crimes. For instance, there is a precedent for restricting a person's access to digital technology. Even house arrest is way more humane (and probably also an overkill).

Theft and fraud on this scale is absolutely violence in some sense. Don't assume everyone that lost money could afford to lose it. The second order consequences of this fraud are likely severe.

Putting him in prison, ostensibly, makes it less likely for someone to want to do what he did. You know, the whole "repercussions" thing? After all, if you stole a billion dollars and all they did was prohibit you from using a computer, why not try?

I cannot agree that deterring others from undesirable behavior is an ethically valid reason to punish anyone. People don't break laws 'just because'. Behind every crime there is always a smorgasbord of neurological, sociological, economic, etc. reasons - these include white collar crime such as financial fraud [0]. Unless we assume the existence of libertarian free will (which we shouldn't), a 'choice' one makes to commit a crime is simply an illusion. If it is an illusion, and our hypothetical crime was not a real free choice on behalf of the criminal, what are they punished for, besides being in the wrong body in the wrong time?

In the majority of world's societies, including US, prison systems are a horrific environment filled with violence, rape, drug abuse and dehumanasing living conditions, which inflicts to the inmates the lifetime of trauma. While at the moment there are no better solutions to isolate truly violent and antisocial people (recurring murderers, gang members, and others - those who simply need to be separated from society)[1], throwing anyone in prison should always be the absolutely last resort, preceded by rehabilitation programs and psychiatric treatment. Throwing people in prison to deter others is ethically identical to chopping away the hands of market thieves - a measure that, while somewhat too barbaric for the modern era, follows exactly the same idea.

[0] - for example, many children, especially from middle- and upper-class backgrounds, are conditioned to 'succeed' at all costs; they often adopt cheating as a strategy early in life - not because they are inherently bad people, but as an adaptation to the constant pressure to be good enough for their environment.

[1] - in fact, the real problem is that people who commit these crimes receive no compassion from society and are universally agreed to be deserving to be treated like absolute scum. If we ever manage to reach a civilized future (which humanity might not deserve), our current methods of dealing with criminals will rightfully be compared to the treatment of people with leprosy in the medieval times - barbaric and evil, but they simply didn't know better then.

>"People don't break laws 'just because'."

Who said they do? And this is the basis of your entire argument?

> Behind every crime there is always a smorgasbord of neurological, sociological, economic, etc. reasons - these include white collar crime such as financial fraud [0]

Who said that's true behind every crime? You don't think there are crimes that aren't the result of social conditions? What were the social conditions justifying SBF' lies and theft?

He also put the reputation of the entire crypto eco-system in jeopardy.

The reputation of the crypto eco-system is already trash. No one serious puts a non-trivial amount of money in this garbage.

He stole people's home money and food money. That is violence.

This makes the term 'violence' useless. He didn't use physical force or any other form of power to force anyone to do anything; instead, he lied to people, convincing them to transfer their money to his platform voluntarily.

If I steal your life-saving medication resulting in your death, do I deserve jailtime?

Would you imprison a burglar that jimmies your lock while you are away? If so, what is the difference?

An even more interesting question is how HN justifies the reaction you're getting for this comment in this thread with the reaction you'd get for the same comment in one of our typical "complain about the court/prison system" threads.

Only so much flagrant cognitive dissonance can sail under the flag of "the community is not homogenous and people pick and choose where to comment".

We can pick the "law, order and punishment" route or we can pick the rehabilitation route but lets at least be consistent once we've chosen a path. Picking and choosing on a case by case basis enables all sorts of terrible miscarriages of justice.

You are saying that the people who think that smoking pot deserves less punishment than stealing $1B, are the dissonant ones?

I'm saying that the people who advocate for or cheer on others advocating for "keep nonviolent criminals out of prison" in one context and then advocate for the opposite or don't let out a peep when others do in the case of a crime they don't like are exhibiting noteworthy amounts of cognitive dissonance. And IMO such cognitive dissonance is fundamentally incompatible with equality under the law.

I'm also saying that "advocating for keeping nonviolent criminals out of prison in one context" and "advocating for the opposite in other contexts" happen to consistently to be explained by selection bias alone.

Non-violent is a big category. If I'm smoking a joint alone on a boat on the lake, I'm breaking a federal law, so I'm a non-violent criminal. My crime has literally zero impact on others. If I steal millions of dollars from my customers via financial crime, causing people, families, and businesses to go under, leading to marked decrease in their standard of living, including potential impact on housing, healthcare, and other critical components of survival, then I've caused real harm to others, violent or not. Do you see how those two non-violent crimes are materially different?

I'm all for reducing the use of prisons, and though both contribute value to society, I'm generally more interested in using prisons and the threat of prisons for rehabilitation and reintegration than for punishment and deterrence.

Having said that, non-violent isn't as interesting a measure to me as scope of impact. A CEO of a company that decides to externalize some costs by poisoning the water or air supply making the local population demonstrably sicker may not have carried a knife, but the scope of his impact could be far greater than some homeless guy who stabbed someone in the arm. The first is clearly non-violent while the second is clearly violent, but the truth is, I'd far rather see the poisoning CEO in prison than the stabby homeless guy.

Is it the same people though?

The courts do this all the time. This is why justice is symbolized by a scale that is a constant balancing act between justice and mercy.

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