Sam Bankman-Fried tries to explain himself
vox.com
vox.com
I mean this is like nested layers of stupidity. You'd be stupid to do this, you'd be stupid to think it's not a major crime, you'd be stupid to think that this was in any way acts as a defense of your crime and you'd be stupid to actually tell people that this is what you did thinking that it's a defense for the crime you committed.
Guy literally though that Ponzi schemes would be legal if only the perpetrators on the way to court wrote on a document "I hereby lend myself all the money I misappropriated"?
> Lawyers tell Axios the main criminal risk Bankman-Fried faces is an indictment on charges of fraud — one of the more common charges in white-collar prosecutions. But to convict, prosecutors must prove beyond a reasonable doubt that someone had knowledge or intent to commit fraud, which can be tricky, they say.
> That’s why the defense against such charges typically centers on something like, "It wasn't fraud, I was just really bad at my job."
> "Typically, in a fraud case, the person at the top argues that he was inattentive, delegated to others, and wasn’t focused on the details," Mariotti tells Axios. "The point is to argue that he was sloppy or inattentive, not a fraudster."
Many analysts did DCF modeling and $22 per FTT looked reasonable.
>The point is to argue that he was sloppy or inattentive, not a fraudster.
If that's going to be his strategy there's still a lot of laughs to have at his expense.
If only it were that easy, "oh I didn't knew I was crossing the border with a hundred pounds of cocaine in my car", like, how come they never thought of THAT? LOL
That said if it is some random retired couple with zero idea what is going on and 10 kilos of coke in their spare tire, as long as they co-operate, most gov’ts wouldn’t prosecute them.
If you can plausibly convince everyone, for instance, that you legitimately thought that the car you got into and drove away was your car, then you didn’t commit car theft.
Good luck with that 99.9% of the time of course.
This is in comparison to strict liability crimes, like drug possession or statutory rape that don’t require knowledge or intent.
Fraud requires that you knew you were lying (essentially), or should have known, to be fraud.
You can’t accidentally commit fraud.
Near as I can tell, SBF would have to somehow convince everyone he had been brain dead while collecting billions of dollars to pull that off here, but hey - defense attorneys have to try something I guess?
It doesn’t requiring knowing what you’re doing is against some law.
It requires knowing what you’re doing (which is against a law).
If what you did is very different from what you thought you were doing because of a legitimate mistake of fact (aka you thought it was your car, but it was not), then you’re not guilty of the crime, because you didn’t realize what you were doing was the thing that was a crime.
It’s roughy why not guilty by reason of insanity is a legitimate defense in some cases.
If someone is so insane they can’t understand what they were actually doing, or the thing they legitimately thought they were doing isn’t a crime, they weren’t committing the crime. That does mean they are probably such a danger to themselves or others they need to be locked up somewhere though.
As with the car defense, it is a very difficult thing to prove in most cases, and for good reasons
And we are yet to see whether they throw the book at her.
There is a paper/tweet trail a mile long that SBF was trying to cover up malfeasance that pretty clearly shows mens rea in my opinion.
Knowingly driving a car someone else stole is illegal, even if you don't actually know it's a crime to drive a car someone else stole (after all you didn't steal it, maybe you bought it from the person). Driving a car that was stolen that you didn't know was stolen is not illegal.
The system also reported small amounts ($400m) last time I checked.
This misrepresentation is fraud.
Could be legit, he's literally digging, admitting to blatant criminal behaviour like it's normal stuff.
> like, "oh FTX doesn't have a bank account, I guess people can wire to Alameda's to get money on FTX" > ..3 years later.. > 'oh fuck it looks like people wired $8b to Alameda and oh god we basically forgot about the stub account that corresponded to that and so it was never delivered to FTX'
I'm not trying to defend his actions him and I think he should be prosecuted to the fullest extent of the law, but honestly, I kind of get what he's saying. I've worked at enough start ups where everything is always chaos and speed and scrappiness are valued above all else, that I feel like I've seen this multiple times. It's like, someone makes a dumb choice and everyone goes, "we'll that's not great, but it's working and it's not that bad, so I don't want to make it my problem" and eventually that dumb decision is just how things are. Eventually, new people join the company and don't realize things aren't this way intentionally and eventually one of them adds another dumb decision on top of that and the same cycle plays out again.
After a few years, you end up with multiple of your processes or parts of your infrastructure based on these chains of bad choices and the one of them collapses. When you're close to the problem, each of the decisions on their own don't look too bad, but when you step back and summarize it in one sentence, it's clear how fucked up things are.
It's funny because he smugly spends the start of this article arguing about how pointless regulators are, but I feel like if there was actually regulation in the space, there's a good chance they would have slowed things down enough to catch these bad decision chains.
I don't think he intentionally lost peoples' money, but I think he was intentionally reckless and for that reason he should be prosecuted.
How do you suppose they took a directional bet, with customer funds, and lost, unintentionally?
SBF's claim is that FTX customers sent money to Alameda and nobody remembered to categorize it as FTX client money.
This is about as believable as my 11yo saying he didn't realize he had to pay for the $50 worth of Pokemon cards he took from Wawa. (This was after he originally claimed the cards were a gift from a friend at camp -- a friend whom he could neither name nor describe to us.)
I’m still trying to understand why investors would entrust their money with them. Why did the press fawn all over him? He talked a big game, but so have literally hundreds of others!
Like, if you are releasing financial documents and a large entry is "HIDDEN POORLY INTERNALLY LABELED ACCOUNT.", it is hard to explain that without getting into outright malice or negligence so extreme that it is difficult to differentiate from malice. Even rudimentary reviews of their finances would have highlighted stuff like this, and they clearly had money to pay people to help them do it.
No one was doing things like that intentionally, but as the company started to grow, so did peoples' egos and they people begin to confuse being reckless with being innovative.
No, it's media damage control. Gets you to think about unverifiable stuff like personal motivation instead of what his company actually did.
It revelatory that VOX interviews him instead of investigating him.
> more careful accounting
Maybe it's just me being cynical. Maybe benefit of hindsight. Maybe a little of both. And talking with my partner, who is working towards a CPA and absolutely loves forensic accounting.
"Careful accounting" doesn't in any way mean "doing the right thing financially", though it is certainly meant to imply that.
"Careful accounting" is "hiding where the bodies/cash is buried".
Really not so different from archilego/ hwang or London metals exchange fiasco or gilt fiasco or oil going negative or cds fiasco or LTCM.
This seems like a weird thing to worry about right now, I imagine my question would be "hey, where'd all the deposits go?" Like, I'm sure it's all interesting in a psychological and sociological way, but "what does SBF really believe" feels like it should take a back seat to what did he do. That's much more interesting! It's easy for someone like SBF to just say stuff about what's going on in his head, whether it's true or not. But, we're talking about real (and, okay, a lot of fake) money here.
There's this weird assumption in a lot of reporting that a rich person must have interesting things to say, or beliefs that are worth getting to the bottom of. Sometimes that's true, but sometimes they're just not very interesting people. Which is fine! Lots of people aren't very interesting, but really rich people get to be treated as interesting even if they're actually boring.
I just commented in this thread about how this story magically keeps getting worse, and then it got worse...
My own disclosure: I have many mutual friends with Piper and participate in the local EA group and contribute to EA causes.
But we know where they went. To Alameda Research. Then Alameda Research sent them somewhere else. The money isn't coming back, and Alameda Research's collateral of FTT tokens is worthless. So that's that, its done.
Its actually quite a simple story here. FTX lent the money to someone else (even if Alameda Research is also owned by SBF), and that other group lost the money.
One minor clarification: "lent" should be "stole". If I can't pay my mortgage, I'm not allowed to go break in to my neighbor's house to steal some cash that I'll "borrow" in the hopes of paying back later.
FTX's Ts&Cs we're very clear - customer deposits were not FTX's to lend.
This is a simple, straightforward case of fraud and theft. No additional "crypto-specific regulations" are needed to reach that conclusion.
This entire line of tweets makes no sense. SBF is a lying fraud that deserves prison.
Not a lawyer, but I think the correct term is "embezzled".
> The crime of embezzlement is defined as the fraudulent appropriation of property of another by someone who has been entrusted with its possession. Unlike theft where the property is taken unlawfully, in embezzlement the property comes lawfully into the possession of the embezzler who then fraudulently or unlawfully appropriates it. The key aspect of embezzlement is the fiduciary relationship that exists between the embezzler and the victim of the embezzlement as embezzlement requires that the property be appropriated by a person who was entrusted with its possession. A senior executive who uses company funds to pay for his personal yacht is guilty of embezzlement even if he intended to return the funds or had the means to do so.
Source: https://www.bayarea-attorney.com/CM/Articles/Theft-Offenses-...
In this case, apparently some people's money was fraudulently given to charities, so do they have to give it back? And what if they can't?
There's a job almost no one would want to undertake.
Not at all.
If Alameda really lost billions or tens in billions in trades, who was on the other side to collect the money? To random people who sold BTC at $64K and then all the way down?
Or were the losing trades a way to syphon billions somewhere else?
Seen the amount involved, the policital donations, the articles in the media portraying the guy as an altruistic genius and seen that tether/USDT/Bitfinex/Deltec are also in the Bahamas, it looks like, maybe, fucking maybe, it's time for actual journalism, actual research, actual congress hearings (at least one is coming in december btw), etc. about what's going on.
Do you really believe it's just a few trades gone wrong?
> Its actually quite a simple story here. FTX lent the money to someone else (even if Alameda Research is also owned by SBF), and that other group lost the money.
For a start you're forgetting the part where FTX was also pumping and then dumping tokens on their customers. Some tokens they created themselves. They're also somehow tied to hundreds of million of USDs getting frozen by authorities, where FTX then quickly raised money. That's fraud, too.
It's much more than "simple". There's serious shit going on.
Seems very thin to me....
With such a large sum gone, the tougher question is "where didn't he piss the money away?"
We haven't seen as much commentary from him post-incident to reconcile who he appeared to be before the collapse, with who he apparently is. I think that angle is actually pretty interesting, but ultimately he sounds like just another deranged sociopath. No surprise there. Still interesting.
FTX loaned money to Alameda, the crypto hedge-fund made a series of bets and probably put some cash in illiquid assets too, but mostly irresponsible bets. Crypto market collapsed, bets that were worth billions with a decent liquidity now became worth millions with not so much liquidity.
They turned to their most harsh competitor hoping for a bailout kinda like how Microsoft saved Apple in the 90s . All that didn't happen, it was the the straw that broke the camel's back.
That's about it, when you are leveraged adverse market events can literally put any company out of business, no matter how giant it is. Chapter 11 is not the end of the world for old companies making real stuff that people will always want (say General Motors or Hertz), but in crypto where everything is about reputation there is no way FTX will ever be heard of ever again.
In the case of the crypto market adverse events of massive proportions repeat themselves every 5 years or so. It happened this year , together with inflation. It was due, at some point the chickens had to come home to roost.....whatever the fuck that means lol.
He took money from an exchange, client money, and without permission used their money ("t" "h" "e" "i" "r" " " "m" "o" "n" "e" "y" -- channeling the genius' tweets here) and put it in his own company, the "hedge fund" called Alameda.
So that is fraud and not a bad bet.
A 'good bet' is that an organization (which merely includes FSB) who due to circumstances was exposed red handed in fraud involving billions of dollars and famous people, which then benefits from "f" "r" "e" "e" PR by established media, starting with "The New York Times", is a protected outfit of some sort, and that the playful sociopaths in FTX/Almada know it full well.
You can't text a fraudster in the bahamas and say "Hey, why are you so shit". You have to text "Hey, you're a precious flower with a special story" and then they tell you why they're shit. There's very clearly a level where SBF feels safe to talk honestly, in a self-incriminating way to a friend, where that friend is actually a reporter working for Vox.
A lot of people (including myself) had listened to him talk (on Sam Harris, on Odd Lots, on Conversations with Tyler) because of his interesting beliefs. I had no idea who CZ was until this week because I am not interested in the minutiae of crypto. But SBF leveraged his image for this.
Ultimately it seemed the amount of actual money of other people he lost was a few billion? Which is extremely awful but less interesting than the media landscape which lead to it, imo, especially if you are not a finance reporter.
Affinity fraud, one of the oldest and truest tools in the conman's toolbox.
SBF: "yeah"
Absolutely gobsmacked.
I saw these screenshots on Twitter and I thought they were fake until I read the article. The rest of the messages from him are pretty terrible as well.
I thought he just fucked up, but no. He was wilfully unethical and maintains he did nothing wrong: "Sometimes life creeps up on you".
And the thing he regrets most is filing for Chapter 11 bankruptcy...
What a cruel fucking joke for all the people who invested with/in FTX.
It would explain a lot.
What is happening is what happens in all long running systems where the generational selection process becomes ineffective due to (typically) nepotism, hedonism, and corruption. What was once, if arguably ethically challenged, but competent elite gives way to an openly corrupt and incompetent set. Healthy systems check this phenomena -- it happens in all power entities historically -- and correct it. When they fail to correct it, they suddenly collapse.
On the one hand, you’ve got this ethics discussion, which in context happened previously, about the ethics of running an immoral business to do good things. Then an ethical discussion about how that answer was BS and all that really matters is perception, and how perception doesn’t mirror reality.
And here I’m trying to reflect on these topics. How do I feel about these things, how would I answer?
Then the next part begins soon after with “messy accounting.”
I view it the way I’d view Michelangelo’s David if it were displayed at a local county fair.
Elsewhere in the DMs he says "I didn't want to do sketchy stuff [...] and I didn't mean to" and "it as never the intention".
None of this reads like bombshell level "Wow this guy is terrible". He comes across as maybe terrible or maybe someone who played a little too fast and loose with an explosively growing business of which he lost control.
> He comes across as maybe terrible or maybe someone who played a little too fast and loose with an explosively growing business of which he lost control.
Same type of statement would be like... They came across as maybe terrible or maybe someone who just had a few too many drinks and then lost control of a new sports car that they were not familiar with and accidentally drove into a crowd of people.
Most people wouldn't call that driver a sociopath who intentionally murdered a crowd of people, they'd say "wow, that person made a couple of really poor decisions and they really messed up and ended up ruining a lot of lives".
I don't know if he is or isn't a sociopath who lied to everyone while stealing billions. I just find the "wow, this guy is a monster" outrage interesting as the source DMs here don't really uphold that portrayal.
"that's basically all that matters for the rest of my life"
Note in other tweets he said he was trying to "raise capital". The man is likely going to prison for years, he is either delusional or trying to promote his delusions to pretend the he didn't know what he was doing was wrong.
Well we can't cherry-pick the sociopathy as real and then start second guessing the bit where he sounds a lot less like a sociopath... can we?
-Using intelligence, charm, or charisma to manipulate others.
- Not learning from mistakes or punishment.
- Lying for personal gain.
It seems fair to call out that you can’t trust their statements this way, if that is what is going on. It’s pretty much the nature of the disorder.
All I was doing is pointing out that if person A claims person B is lying about their motivations and good deeds and actually causing harm because they are a sociopath, saying person A can’t claim that doesn’t make much sense.
I have no particularly strong opinion in if anyone is or is not a sociopath. I’m just pointing out that lying about your intentions and good deeds while causing harm is a pretty textbook element of ASPD. It’s certainly not unique to ASPD of course!
Do you have specific elements of sociopathy you think can’t apply?
Or more just pointing out all of this is bullshit speculation anyway because no one can diagnose someone off a couple of tweets in the middle of a scandal anyway?
That's a classic "ends justify the means" slippery slope.
And even if he didn't want or mean to, he was more than happy to engage in that kind of behaviour if needed.
Someone like that is absolutely a terrible person in my book. I would not trust or be friends with someone who has that attitude. He is more concerned with "winning" than behaving ethically.
Imagine if you were an FTX employee, customer or investor who was in the dark. Would you really just chalk this up to playing "a little too fast and loose with an explosively growing business"? Would you be happy to work with SBF again? I know I wouldn't.
This reads to me as "I was viewing all these situations in isolation instead of looking at the full system" not your reading which seems to be more "I thought I could get away with each individual thing".
To your last point, Parker Conrad was dragged through the mud and shunned everywhere when Zenefits imploded but he came right back with Rippling and is a tech darling now.
From a quick reading of what happened with Zenefits (Was not keeping track of tech back then), it seems bad but not as bad as FTX.
I'm also not saying that everyone would not want to work with someone like that again. I'm sure some (Most?) people would, but for me it would take lot to convince me they're not going to repeat that behaviour.
He mentions that he didn't mean to do sketchy things, but he was definitely more than willing to engage in unethical behaviour.
Previously, I did not think he was being brazenly unethical. Now, I have the impression he will do anything it takes to "win".
> Now, I have the impression he will do anything it takes to "win".
Not sure what's the distinction you're making here.
- Someone was dumping our coin
- We found out it was Alameda
- We asked them to stop market making, yet they continued dumping, all on Liquid
- We have a lot of proof showing the above
- We've known about the FTX scam months and months ago & contacted the SEC
- Media did not listen to us
- No one was listening because no one wanted to believe FTX & SBF was a scammer, even some of the biggest VC firm
- I sent everything to the FTC multiple times, MONTHS AGO, & they didn't even reply
- I won't comment on whether Gary Gensler was involved
- Many exchanges & entities are likely wash trading like FTX. This issue is systematic
More summary here https://twitter.com/marionawfal/status/1592947918146654208
Source is the Spaces chat here, starts around 4:51 https://twitter.com/nugenmediahub/status/1592941623306252288
I'm sure lots of people fall for it and think he's legit. Is that just an age thing or are some people just that gullible and when you have global reach via Twitter and Instagram, you'll find them all?
- he lent his own hedge fund $8b collateralized by tokens he controlled issuance of (FTT, SRM, MAPS, OXY). At full size, the liquidation price of these tokens was 0 (he also purchased billions worth of FTT off the market when he could print them himself for free?).
- Sensing alameda was insolvent and customer funds were misappropriated, customers withdrew until they ran out of liquidity.
- Withdrawals were suspended
- Citing Bahamian authorities requests to unfreeze assets of bahamian residents, withdrawals were opened back up for bahamian residents. Hundreds of millions were withdrawn. Bahamian authorities have since made statements that no such requests were made (so this was just insiders stealing even more).
- Approx $500m of assets were drained from FTX wallets at the same time as FTX databse records were cleared (obviously not a hack, just insiders stealing even more).
- SBF goes on twitter to make new one-letter tweets while simultaneously deleting incriminating tweets so as to not trigger deletion bots picking up that he deleted said tweets.
Ongoing theft and destruction of evidence out in the open after stealing 10 billion dollars from over 1 million depositors. SBF has still not been arrested. This all but confirms the wildest of conspiracy theories.
There's a polite theory it is done for altruistic reasons to make the country a better place for all and that it is the exercise of free speech and you are also free to give Trump, Biden, Pelosi & McConnell vast amounts of cash.
But yes we're all adults here.
I'm sure that in a few years, once the courts get everything sorted out, we'll learn which of our prejudices is closer to reality. As of today, though, we're both just speculating.
Because they think the candidates they support will make the world better either personally for you or in a more general sense? Oil companies give money to manchin because they know he agrees with them and if he wins will fight for their legislation, whether they funded him or not.
Neither they or you know that. And nobody but you assumes that Manchin fights for his beliefs, rather than for what benefits him personally. And no, I'm not assuming the opposite. I instead choose not to fantasize about his internal states, or speculate about what he would do if an industry that has always supported him ceased to support him.
That some guy with access to a lot of cash tried to buy influence is not a "conspiracy theory" because it is unilateral. And, if that's what he was trying to do, it seems like a really poor strategy since you cannot really buy influence over law enforcement that way.
I'm personally much more interested in the billions or the tens of billions that disappeared (in the bank account of tether/Deltec?) than in the petty amount that went to the democrats but... It's a fact that media were posting articles explaining how crypto was helping Ukraine (and there was a government ran website in Ukraine accepting crypto donation).
SBF's very mom was running a political fundraising thinggy.
It's also a fact that at least one US congressman is saying Gary Gensler was allegedly working hand in hand with FTX to allow SBF/FTX regulatory capture of crypto exchanges.
I'm not saying they did: I'm saying a US congressman says he has records indicating that.
These are facts. Now did these donations to Ukraine found their way back to FTX? (and if that's the case there's at least some truth to the conspiracy for it's a fact that SBF was donating stolen money to her mommy's fundraise)
I think it's a bit early to dismiss with the back of the hand the information people are digging out.
The one thing that seems certain is that if we were to depend on the journalists from the New York Times to investigate on that we wouldn't go very far.
The usual angle is also going to be used for sure: "The wildest conspiracy theories are false, hence nobody besides SBF did anything wrong".
People are trying to connect the dots. And with 130 companies, blinded journalists, a political party receiving $40m in donation, etc. there are certainly dots that do need connecting.
Congress hearings in december for a start. Should be interesting (even if I don't have high hopes).
And yes, both are corrupt, but one is business as usual and the other is a serious federal crime that prudent members of congress avoid.
This part seems to have been mostly speculation. He deleted 118 tweets & retweets, so his one letter tweets did little to cover his tracks[1]. I have no idea why he did the one-letter thing. Maybe to get attention?
....that is what I read and it makes sense.
"Under supervision".[1] Rumors that he planned to escape to Dubai. But Dubai signed an extradition treaty with the US a few months back.
Extradition to the US may be pending.[2]
This is the sort of situation where, if there is an arrest, the perp gets held as a flight risk.
[1] https://cointelegraph.com/news/sam-bankman-fried-is-under-su...
[2] https://www.dailymail.co.uk/news/article-11433541/FBI-planni...
> like, "oh FTX doesn't have a bank account, I guess people can wire to Alameda's to get money on FTX"
> ....3 years later...
> 'oh fuck it looks like people wired $8b to Alameda and oh god we basically forgot about the stub account that corresponded to that and so it was never delivered to FTX'
So they "basically" forgot about $8B not transferred to FTX.
But somehow FTX customers saw the funds deposited in their accounts, otherwise they would have complained.
Alameda Research was clearly in the top of the worst hedge funds ever, and clearly they had terrible controls and accounting.
However, without (c) you don't get this epic disaster. From SBF's tweets it is clear that they were aware they had to keep customer funds segregated.
Remember the time they tried to pretend that USD is protected by the FDIC?
https://www.cnbc.com/2022/08/19/crypto-firm-ftx-receives-cea...
Well, actually it was protected by the FDIC, but not from FTX.
I just hope crypto learns from this and normalizes Proof of Reserves
Most people seem to be just using "prove you hold some amount" which is a very poor cousin. However, it is pretty clear that FTX would have failed even that, so maybe we should lower our expectations?
Many, many, many people have absolutely bought into the crypto dream, put their savings on an exchange and absolutely ended up entirely destitute. There are swathes of evidence of exactly this.
It was a stupid decision, but at least from their PoV, it was only a stupid decision in hindsight.
Point 1: Most personalities are shams. Ethics/politics among the powerful is a lie/shibboleth.
Instinctively you know this to be true, but hope in a great savior is deeply ingrained.
Point 2: Regulators make things worse. They are actively working against our interests.
He would know best; they created him. Again, we want to believe in the great savior myth, but they are just people: lazy, corruptible, political, etc.
Point 3: Chapter 11 made things worse.
He's probably right about this too. He's saying that he would have the power to pay back depositors first. Chapter 11 only gives him legal protection, and puts depositors last. They will liquidate everything to USD, pay a 10% commission for a horrible rate, and then pay the lawyers, then the counterparties, then the investors, and then a tiny fraction back to depositors, years down the road. Another MTGOX/BITFINEX.
As a reference, the Irving Picard recovered $9.3B from Madoff and paid only $5.4B to depositors. The rest evaporated in liquidation expenses and legal fees of $700M. The legal fees for Lehman Brothers liquidation was $1.6B. The people running the show now are not your great saviors; they are incompetent, greedy, and morally disconnected.
Is this accurate? That's absolutely insane. _That_ sounds like fraud/theft.
I don't know much about it, but until the lawyers got involved, the only losses were the made-up gains. Then they took $4B in real money.
So, who's the real crook?
https://money.cnn.com/2013/05/06/news/companies/madoff-picar...
However there's no reasonable excuse. You can't be like "aw man, I wish we'd been more organized". A big piece of this is on the investors. All those depositors would have been saying "Hey Sequoia and OTPP are in there, they must have checked things are sound". Was that foolish of them, to assume reputable investors had done their due diligence? You're between a rock and a hard place when you answer this. Either they should have all done their own DD, basically not invested because who can do DD as a little guy, or large investors are not responsible for what everyone else thinks they did, which is a rather major indictment of how our financial system works.
But back to SBF's explanation. It's just juvenile, basically the same as "mommy, you didn't make me clean my room and now I slipped and hurt myself". Whatever the laws are, when someone trusts you with their money, you are responsible for certain basic things like knowing where that money is. All the money in the world and they didn't think to hire an accountant and a risk manager. Or perhaps they did and those people quietly left, we'll never know.
About the regulators, it's quite the about-turn. He goes from saying it's a good thing (which was why CZ got pissed at him?) to saying it was just PR, and that regs basically don't work anywhere. I think this is also a juvenile view. You can make the case that it often leads to unintended consequences, and that it often causes problems, but you can't sweep all regulations in all sectors into the bin, there's just too much evidence that it sometimes does work. In fact you could say that the very reinvention of finance as crypto ought to motivate participants to look at what problems were found in the financial world that were addressed by regulation. Glass-Steagal, deposit insurance, central banking, there's a lot to read about.
Sigh. So this is how confidence men and politicians and scammers can make good livings.
He just said that all the good-sounding things he said in the past about ethics and doing the right thing was "this dumb game we woke westerners play where we say all the right shiboleths and so everyone likes us".
People: oh wow so true
When my old boss blew up it was "hmm they knew what they invested in".
I believe he'll try to avoid jail at all costs, and that may include making people whole again, but trying to flee seems much more likely.
So, basically start up a new Ponzi. Because that's exactly what raising money from new investors to pay off existing investors is. Note he did NOT say "generate $8B in profit".
At this point he needs to STFU, stop posting on social media, stop giving interviews in the media, and do whatever his lawyers tell him to.
This part is "if I firesale all the crypto, can I get enough fiat to pay back my customers so that there's no case for me going to jail because no one lost money, just got stressed out."
This isn't "invest in FTX". This is "buy everything at my going out of business sale for one transaction and make money"
Now, I don't think his assets are worth $9B. But if someone out there with the ability to raise $8B thinks so, we'll find out soon.
And you are also correct that what he likely is greatly over stating the value of the assets he is holding, which is funny money tokens like FTT, SRM, etc which he is artificially inflating.
Matthias: "Worse?! How could it get any worse?"
--Monty Python's Life of Brian
EDIT: Okay I just cannot get over this, obviously I'm exaggerating but it's pretty much "I didn't want to do bad stuff because that would be bad, and then after I had personally done all of the bad things, I realized that I had, in fact, done something very bad."
It’s absurd as he is essentially a well connected criminal.
edit I do want to correct one thing - this is not a puff piece like the NYT one, actually it implicates him.
[1] I can't say I've ever felt that I was well-connected politically...
“When I went to California to try to fight into it, I thought, ‘Well, there’s only 120 legislators. I’ll talk to them all one on one,'” Bankman said. “I found that in order to do it, I had to hire a lobbyist because I just couldn’t handle the details or get the meetings. In Congress, when I went there, now there’s 500 plus, and what I found everywhere I went is that Intuit had already preceded me. They’d already met every representative I was going to meet.”
Did your mother create a political fundraising organization?
“In 2018, the secretive Stanford-connected Democratic fundraising group Mind the Gap (MTG) funneled over $20 million toward competitive U.S. House of Representative elections and get-out-the-vote (GOTV) organizations. In 2020, MTG wants to increase that number to $140 million.
“MTG is led by Barbara Fried, the William W. and Gertrude H. Saunders Professor of Law; Paul Brest, an emeritus professor of law and director of the Law and Policy Lab; and Graham Gottlieb, a Stanford research affiliate. Of the three, Gottlieb has the most direct policy experience, having formerly served in junior roles in former President Barack Obama’s 2012 reelection campaign and in Obama’s White House.”
He would have done better with a street smart criminal lawyer.
Not sure what what the people pushing this narrative aren’t understanding.
If they wanted to protect him they would refuse to interview him and try to convince him not to speak to anyone but counsel about this.
They are clouded by anger and frustration, I’d wager, many folks lost money in this fraud. Some maybe caught up in the mob mentality and excitement around taking SBF down.
Anything short of absolute demonization is not good enough when you’re mad, I suppose.
From the other day, it seems, they're angry that the NYT isn't saying, in exact words, "SBF is a massive criminal who committed massive fraud".
And when you respond and say "That's because their lawyers understand the concept of defamation", they say "well, then they just need to talk to people and have them say it so everyone knows he's a criminal and committed fraud".
I'm not sure whether you're saying "I did something bad, repeatedly, but it's ok because I'm admitting it" (while arguing someone else who did something bad shouldn't be let off the hook for admitting they did something bad), or whether instead you're taking pride in routinely acting in a way that subtracts value from the community (while arguing someone else who acted in ways detrimental to the community should receive harsher judgements than you feel he's received).
Either reading suggests an opportunity for productive self reflection.
Posting criticisms of articles you haven't read isn't the scale of damage that SBF caused, but the belief that "I'm not intending to cause harm so the harm I'm causing isn't real" appears to be at the root of both sets of outcomes. The impact of SBF's actions was higher simply because one day he found himself holding a larger lever than most of us have the occasion to hold. It's good to be in practice, should that day come.
> Why didn’t Bankman-Fried realize what was happening until it was too late? “Sometimes life creeps up on you,” he said.
This is the central issue of the case. There aren't many paths for an exchange to experience a run unless it's acting like a fractional reserve bank.
So here's an admission that Alameda borrowed from the FTX balance sheet. There's also a denial that FTX invested deposits. There's no way for both statements to be true.
/s
https://cdn.vox-cdn.com/uploads/chorus_asset/file/24202784/S...
https://nitter.net/SBF_FTX/status/1593014934207881218#m
> Nov 16
> 25) Last night I talked to a friend of mine.
> They published my messages. Those were not intended to be public, but I guess they are now.
theunitofcaring responded at https://forum.effectivealtruism.org/posts/vjyWBnCmXjErAN6sZ/...
journalists are not your friend
Maybe all those stimulants have taken their toll. Or he's totally given up.
My bet is that he lost his back country. He was until recently the front-person for a hugely successful enterprise who donated money extremely broadly. Back then he could have yelled "I run a goddamn ponzi scheme" into the loudspeaker of huge credible news outlets and they would have edited to "Master genius is going to revolutionize everything through revolutionary crypto". He's speaking into the same loudspeaker because he still thinks the message that got through back then was due to his skills as a communicator and not because... they where all on the receiving end of the cash flow he was throwing around every which direction. But obviously anyone who was receiving money back and writing favorable about him back then will do their best to distance themselves now.
Case in point, quote from article: (Disclosure: This August, Bankman-Fried’s philanthropic family foundation, Building a Stronger Future, awarded Vox’s Future Perfect a grant for a 2023 reporting project. That project is now on pause.)
Which basically says they where on the payroll. Obviously they aren't going to pay the money back. You have to wonder what great articles about SBF they would have printed in a completely unbiased fashion if not for the implosion.
Why would skilled manipulator effective altruist SBF do this? He made a big gamble using customer funds to try and keep his business running. This is kind of like his coinflip thought experiment where he would risk the world to gain a second world. His gamble blows up and he loses everything. What's the most effective thing he can do now? Fall on his own sword, discredit himself as an evil charlatan, in an attempt to try and save face for the philosophy he actually believes in.
"No, I'm not really an effective altruist. I'm actually just evil and dumb. Hehe."
I would assign very low probability to this - but it is an explanation that explains, to some extent, his actions here.
There are people blaming the CTFC and Congress and the Democrats that SBF donated to for not regulating this.
But was FTX (the Bahamian entity) even under their purview?
AFAIK, you weren't even allowed to access FTX from a USA IP address, you had to use a VPN. You could access FTX US which was a different thing and offered a much smaller subset of the products FTX did (and that business seems solvent?)
Like what jurisdiction does the USA have over a crypto exchange elsewhere? I know anything that touches a US dollar can be tried in a Manhattan court and maybe he gets convicted of a crime and extradited here. But like Japanese banks touch US dollars as well, but the USA doesn't get to regulate them, right?
¯\_(ツ)_/¯Sums up much of the world we live in :/
He's thinking he's chatting with an accomplish who's going to help him spin some positive PR to help his last ditch fund raising.
But in fact he's chatting with someone who's desperate to distance themselves from a person they received money from, so as not to end up looking like they got paid for biased coverage, which lets be honest is what most likely happened.
And for another linked CEO they'd been a trader for three years, and then were made CEO at Alameda?
COWEN: Okay, but let’s say there’s a game: 51 percent, you double the Earth out somewhere else; 49 percent, it all disappears. Would you play that game? And would you keep on playing that, double or nothing?
BANKMAN-FRIED: With one caveat. Let me give the caveat first, just to be a party pooper, which is, I’m assuming these are noninteracting universes. Is that right? Because to the extent they’re in the same universe, then maybe duplicating doesn’t actually double the value because maybe they would have colonized the other one anyway, eventually.
COWEN: But holding all that constant, you’re actually getting two Earths, but you’re risking a 49 percent chance of it all disappearing.
BANKMAN-FRIED: Again, I feel compelled to say caveats here, like, “How do you really know that’s what’s happening?” Blah, blah, blah, whatever. But that aside, take the pure hypothetical.
COWEN: Then you keep on playing the game. So, what’s the chance we’re left with anything? Don’t I just St. Petersburg paradox you into nonexistence?
BANKMAN-FRIED: Well, not necessarily. Maybe you St. Petersburg paradox into an enormously valuable existence. That’s the other option.
https://conversationswithtyler.com/episodes/sam-bankman-frie...
(See the first paragraph of https://www.lesswrong.com/posts/BZ6XaCwN4QGgH9CxF/the-kelly-... for the outline of an explanation of why his reasoning was not applicable to most real-life scenarios. This is pretty subtle; >95% of the explanations on the Internet I've seen over the past week as to why SBF is "obviously wrong" don't actually work.)
Maybe I'm speaking too soon, but he does seem ready to accept that he lost this flip. It would obviously be insane to trust with him anything big at this point, but I'm optimistic that he won't fight to the bitter end.
Most of the ones I hang out with seem to agree with my characterisation of Utilitarianism as what happens when philosophers discovered basic arithmetic and then just stopped there. Most recently:
"""I remember in secondary school, with nobody to teach me more than basic trigonometry and algebra, I spent 6 months figuring out what I later learned were the two ways 3D rendering can be done: ray tracing, and turning points in 3D space into points in 2D (screen) space and drawing those as 2D primitives.
Utilitarianism feels like even less than that, to me. It's the foundation of algebra upon which more can be built, saying that utility is a thing that can be combined, but it doesn't really say how to combine utility, and all the weird things that happen in extreme hypotheticals are because it's naively summing the potential utility of unbounded agents."""
>BANKMAN-FRIED: Well, not necessarily. Maybe you St. Petersburg paradox into an enormously valuable existence. That’s the other option.
This logic is literally "You either win the lotto or you don't, 50/50 chance"
The original thing being referenced is St. Petersburg lottery, and each round of that is 50/50: https://en.wikipedia.org/wiki/St._Petersburg_paradox
I'm actually somewhat impressed by someone who articulated a stupid logic about how to live life and then actually followed through.
I was quite frankly shocked that I didn't see more people questioning his judgement/ethics after this and other strange statements
It is extremely risky and ill-advised, but as SBF said, it’s possible to end up in a very (very!) good position. The crux is that infinity doesn’t exist. You will place the bet at most a finite number of times.
You know, "Sometimes life creeps up on you" and then the customer deposits you stole are gone!
He's clearly innocent, so he has nothing to worry about.
If his texts are normally similar to this, how did anyone serious think this guy was brilliant?
He made a lot of money by bucking norms. Hacker news of all places should recognize that people are drawn to those who project an appearance of improbable success through skill despite a lack of underlying competence (see also: Elon Musk)
I had no idea the sums involved were this big, and the operation this much amateurish.
There’s a few, like less wrong, but this is the main one to many
Ugh.
But no, he’s giving interviews to Vox.
All these fawning interviews beforehand. All this assumption that he’s a crypto-messiah. All the true believers.
At this point, crypto is a cult. And the sooner it implodes and/or explodes so we can be done with it, the better off society will be.
When you watch CT (Crypto Twitter), retail getting wrecked in pump and dumps is an every day event. This one is different though. Some very huge accounts/traders each lost many digits of wealth and given their influence in the community, this doesn't really improve moods.
So when a lynch mob is forming, these statements of smug indifference might not exactly calm things down.
It seems like everyone, (even these characters), don’t even care because it’s “only a few hundred million”
And it does seem like whoever this was might get away with it because everyone is focused on the larger issue. Which is understandable.
He more or less admits that the effective altruism stuff was a sham.
On a related note: https://youtu.be/d-7o9xYp7eE
1) He pandered to regulators but doesn't believe regulators (across industries) are able to do any real good
2) He didn't mean to do sketchy stuff, a bunch of small decisions snowballed into a disaster
3) Winning > Ethics when it comes to public perception
4) He didn't have a good handle on what was going on at Alameda and didn't keep the entities separate enough as they grew
5) He lacked visibility into what was going on and missed the complex systems failure mode
--
Looking at the "ethics" messages for example, SBF never really says that he thinks it is okay to act unethically.
* He previously said that that people shouldn't do unethical shit because it'll hurt their reputation
* Now (in the DMs) he said: "it's not true really" -> mentions unknown heros and well-known shams -> gives the example of CZ being hated a month ago for being unethical but now CZ is a hero for winning despite being unethical
He never says that being unethical is okay—he says that in the world today, winning influences your public perception more than whether you were ethical or unethical.
These people are such idiots.
Madoff, no cpu on the network on the critical path. All understandable and could have been done the same with paper and a filing cabinet.
SBF - so the code actually does (brain shuts down).
Interesting to see if this is so extreme people will keep thinking through the part where they want to stop because "computer"
--
edit: I'm rate-limited so I can't respond to your other reply. I'm saying that your comment looks like something a crazy person would write and I had a hard time parsing it. this is like a garden-path sentence:
> SBF has used at least one cpu attached to a network on the critical path of his actions. Will this be enough to cause people to be stupid enough to let his powerful and connected family and friends get him off light? People in positions of power seem to get awfully stupid when there's a cpu attached to the network on the critical path.
i thought you were making some kind of paranoid implication about the intel management engine or mind control or something.
and I replied because I thought you should know that what you wrote wasn't clear on the first, second, third, and fourth readings.
You are attempting to communicate on the internet and you are not being easily understood. It’s your choice if you’d like more people to understand you or not.
vs
"what"
Spot the difference in terms of being confusing. But he does understand now without assistance so we're all good, right?
I've read that sentence of yours at least 5 times now and it still makes no sense to me. Would you care to elucidate?
he's saying that politicians, journalists, regulators, etc, got bamboozled by what was at root a very ordinary fraud, because it was enabled by fancy technology.
I don't pride myself on having a lot of criminal energy or anthing but I don't understand how he even got to this point. Is this his last act of effective altruism for whoever sues him in a court?
It doesn’t, by any means, excuse what he has done. Yet the conversation delivers a very authentic insight into how people at the top of financial institutions with the goal to earn unreasonable amounts of money the get rich people richer actually think and act. For that it’s a great piece.
But that does not mean you can play innocent when you lose it.
https://astralcodexten.substack.com/p/the-psychopharmacology...
Selegiline metabolizes to the inactive isomer of meth: l-methamphetamine. Which is very much not trucker crank—it’s an over-the-counter decongestant.
Was he on good ol’ non-meth-amphetamine, in the form of Adderall? Sure. But rather a lot of people are on Adderall, and most of them haven’t created a market-shattering boondoggle.
Grotesque.
He does sound sincere here - no idea what to make of this.
He probably hopes for a bailout from either BitMEX or Bitfinex-Tether and is simply trying to appease them by walking back his pro-government views
Also, privacy should be a human right.
If you disagree with the above, you might be a fascist.
Code for an Arduino that moves a robotic arm is legal. Using it to pull a trigger and kill someone isn't.
The police statement is https://www.fiod.nl/arrest-of-suspected-developer-of-tornado... - it seems to say he facilitated money laundering. Which could mean simply writing code or could mean doing more.
More info on https://www.notion.so/FreeAlex-campaign-1f8db0a2fdfc48b3b86a... which is a horrible notion site with a strange and awful UI.
https://www.reuters.com/business/finance/exclusive-crypto-ex...
I suspect they're smart enough not to.
However, as a society a choice we made was to enable individuals to message secretly with each other over encrypted communications, even if there are significant and documented harms to society.
Tornado Cash did not rob from 1 million retail customers, while FTX did. I think your argument is far too simple.
Uh... what?!
You do know that if you break encryption for gov't you break it for the bad guys as well?...
You do know that there are all kinds of nations that will throw you in prison if you hold the "wrong" opinions, which those opinions become known when they are funneled through the gov't servers?...
Considering that Tornado Cash implemented OFAC compliance and they were still banned would suggest to me that this isn't a fair take. Tornado Cash had long since blacklisted known accounts from sanctioned organisations and tried to be overwhelmingly transparent about the fact that the project was focused on providing privacy for normal people and complying with regulations and sanctions to the best of their ability.
One of the major issues with the US in particular is that regulatory and enforcement agencies refuse to establish well defined guidelines that are compatible with digital ledger tech. You can have privacy preservation and regulatory compliance all at once via zero knowledge proofs (as an example solution) however regulatory agencies insist that organisations operate within a system that provides significantly weaker compliance guarantees while also eliminating any means for privacy. Tornado Cash tried to operate within that weaker system to the best of their ability and repeatedly reached out to officials in good faith to properly implement compliance. Despite that they were still sanctioned.
What isn't going to happen overnight, justice? A fairer world?
I don't think a fairer world is on its way, I wish it was but the powerful won't be held accountable because people simply don't have the power to hold them accountable. We simply don't live in a just world.
Holmes is probably going to prison. Idk what's going to happen with SBF, but to prosecute you need evidence and there's a process.
I am lucky enough to live in New York, so even when tempted, I couldn't partake in this charade without trying to find a bunch of shady loopholes.
But as for the others, I guess you just can't win.
There’s no one “international police” and each nation has to coordinate - and acts at its own cadence.
And yes he is not charged but he has seen a judge who has heard both sides and decided there was a strong enough case to hold him there( which is quite rare i might add and generally only happens for severe cases).
Holmes will see real prison soon.
Do Kwan is on the lam. When he's caught, he will do time.
SBF will almost certainly do time. FTX only imploded this week.
> by this dumb game we woke westerners play where we say all the right shiboleths and so everyone likes us
Woke washing pays off, that is why everyone does it.
But luckily BTC is there to take the blame.