Bankman-Fried and FTX Execs Received $4.1B in Personal Loans from Alameda | Hacker News Reader

Bankman-Fried and FTX Execs Received $4.1B in Personal Loans from Alameda

forbes.com

91 pointsekpyrotic61 comments

The more I read about this, the more Im absolutely dumbfounded that Sequoia poured money into them. It took an outside executive 1 day to find out how effed their balance sheet was. Did Sequoia not perform any due diligence?

Most of the partners lost it when SBF mentioned that his dream was to create an app that lets people buy bananas on FTX

I LOVE THIS FOUNDER!!

I am a 10 out of 10!!

How many of that billions flowed into Sequoia pockets too is the question ;)

Exactly lol. Way too many people are getting hung up on how sophisticated VC / funds could have invested in FTX/SBF. We often forget these "investors" want above all an exit plan where they get their money back and more. They couldn't give a shit if the company is run with a balance sheet drawn in mspaint with the spraypaint tool by teenage ponzi schemers as long as they know they get the exit before it topples down.

One interesting story that's gotten a little lost in the chaos is that after Sequoia invested in FTX, Bankman-Fried also invested $200M into two Sequoia funds:

https://www.ft.com/content/993942cb-1a7e-4689-9d9d-8434d4a74...

doesn't make sense. if this guy invested 200M USD into Sequoia and then Sequoia invested 150M into FTX. This is not even breaking even and also washtrading.

Got Sequoia’s name on their site though didn’t it?

True. Excellent.

They were too busy learning League of Legends to care.

You think Sequoia wasn’t made whole (or more)? They likely received tokens and immediately cashed them out (tokens which cost FTX nothing to produce).

According to themselves, they've lost 150 million: https://twitter.com/sequoia/status/1590522718650499073

Right.

"Of that total, $1 billion went to Bankman-Fried in the form of a personal loan, while $2.3 billion went to an entity he controls, Paper Bird (Bankman-Fried has told Forbes that owns 75% of the entity, with Wang owning the rest)—so that’s another nearly $1.73 billion at Bankman-Fried’s disposal."

Oh my god this guy is going to jail so hard it's wild to watch. It just gets deeper and deeper

If they catch him. It’s probably a hard process to extradite someone from the Bahamas.

It's not that hard. The US has an extradition treaty. Now, Bahamanian charges may take precedence, but that could just mean getting extradited to the US as he is being released from a Bahamanian prison.

It is possible to fight extradition under a few theories, but I don't see how they apply here.

I don’t think his trip to the Bahamas was a coincidence so I think he will use his resources to make it difficult.

Also another thing to consider is wether he will stay in the Bahamas if it becomes a problem.

He was based in the Bahamas for their lax securities regulations. He didn't run there when things went bad, he was living in a penthouse there.

*He and his polycule harem of mostly men and Caroline Ellison, someone with zero finance knowledge yet somehow running a multibillion dollar hedge fund

There is no evidence it was a polycule and if it was the fact that they are mostly men would only be brought up for homophobic reasons. He and Caroline Ellison were apparently involved. I have no idea why any of that really matters.

You're right the wording in my original post was terrible, I apologize and can see that it could appear offensive as written. It doesn't matter and isn't relevant to the core facts that he clearly stole and misappropriated billions of dollars from his company's depositors and engaged in fraud, wire fraud, misuse of funds, self-dealing, and other criminal activities that were explicitly for the purpose of enriching himself.

In my opinion, I do want to say that given the more provocative elements of the story, I get a sense that it seems to point to a larger-than-life lifestyle involving people working together and engaging in activities that mixed drugs, sex, and huge amounts of money - not to mention the "conspiratorial" elite connections to political figures and academics that are connected via SBF and Caroline Ellis. Given that so many people were impacted by what are crimes, as can be seen by how ferociously the twitter sphere is picking at all parts of the story - it appears that everything is under judgement, frankly.

>by what are crimes, as can be seen by how ferociously the twitter sphere is picking at all parts of the story

Making Twitter angry is illegal now?

Their in-house psychiatrist to write them all scrips said that the amount of drugs and hooking up was way overstated. Maybe? Maybe it's the dealer saying there are no drugs? I have no idea.

"Rich 20-somethings like drugs and sex on tropical beaches" is a pretty uninteresting story to me. "Rich 20-somethings do so much adderall that they code backdoors instead of having sex whith tropical beaches are outside" is at least more interesting to read about.

Well he did coincidentally go to the Bahamas and went MIA on social media right before things started to collapse. I would call that running.

He's still giving interviews on Twitter to Vox journalists and somehow to NYT journalists. The Bahamas are both his full time residence and as of last year his listed permanent residence.

A minor detail in the scheme of decabillions of, at best, mismanagement.

I do wonder how much money has gone to local/state officials pockets. From SBFs previous billions

I think the promise of future bribes buys you favors. Past bribes, and the inability to pay future bribes, won't get you very far.

also he is presumably not a citizen.

> I don’t think his trip to the Bahamas was a coincidence

Not at all a coincidence. It is where he lived and where his company was based.

No coincidence at all he was in the Bahamas when it all blew up!

Well it seems the FBI are “mulling” it, but SBF is not impressed:

https://thenassauguardian.com/mitchell-on-bankman-fried-extr...

He is back in the US according to reports from a few days ago

Why, is he that stupid ?!

SBF was just spotted earlier today in what appears to be a grocery store in the bahamas with no security or law enforcement around...

https://twitter.com/psyopcop/status/1592977107281666049

I wonder how much it costs to buy the worlds best double and a stowaway spot on some relatively uninteresting looking yacht headed out into international waters.

He also donated $39M to political campaigns this year, likely winning him some favors from powerful people. Not to say it would protect him from criminal charges; but it's not unfeasible to think it could knock him down a few slots on the extradition priority list.

This is commonly repeated, but if you game out the incentives it doesn't hold up. Instead, politicians tend to sacrifice the worst criminal donors (see Madoff) to avoid scrutiny of the whole system.

A politician wants to maximize future donations. SBF won't donate in the future, and other donors won't stick up for him.

So why should politicians continue to deliver? A deep sense of fairness?

> So why should politicians continue to deliver?

If the politicians protect SBF to any extent, they signal to potential donors how useful a donation can be. Some of the rich will start donating or increasing their donations to get the same "get-out-of-jail-or-have-sentence-reduced" card.

I think it is a tacit agreement among white-crime - don't get too big. So long as you can stay out of the spotlight, you are probably fine. SBF was evidently way too greedy and far too public. This crash is spreading to the entire crypto economy and has a chance to bring it all down.

Someone is going to be the sacrificial lamb, and there are few targets as juicy.

Also on certain level you have to have at least some level of plausible deniability for fraud committed. That is have enough players involved in it.

Madoff failed this. And if even fraction of what SBF has done is true. Yep, he is also going away. As this has entered outright territory of fraud.

You're not buying a get-out-of-jail card, since that's not actually valuable to most people.

You're buying influence over laws and regulations that directly impact your ability to make money, which has much greater value to most donors.

I explicitly stated this would not protect him from any criminal charges. What I suggested was, extradition is a lengthy and involved process to initiate, and requires many coordination challenges for both countries. There's limited resources and SBF is not the only individual authorities are seeking to extradite, and I don't think it's far-fetched to think his political contributions reduce his chance of appearing on the Interpol Top 10 most wanted list. I could be wrong but it seems reasonable to me.

And I don't necessarily agree the incentives don't hold up. Why would SBF have gotten the idea to donate millions of (his customers' and investors') dollars to political campaigns? Every top political donor does so for lobbying power and to win favor with politicians as the primary factor.

My friend lives and works there (not at FTX), he said he saw him walking around yesterday without personal security but with federal escorts.

So it seems, but I wouldn't bet on it yet.

So far, Do Kwon, Mashinsky, Three Arrows Capital, and all those other scammers are not in jail. Not a single one.

Don't worry if they do get convicted.

> Then (Martin) Shkreli addressed Kwon directly, “Hey Do, I just wanted to let you know jail’s not that bad. It’s not the worst thing, you know. So don’t fret if that... I hope it doesn’t happen, but if it does happen it’s not that bad.”

https://gizmodo.com/pharma-bro-crypto-do-kwon-terra-luna-184...

That's because he didn't go to real prison.

As real as it gets for these folks apparently.

Assuming he doesn't get Epstein'd before then.

Technically, that happened in jail

This guy needs to be in Russia yesterday. Edit: Oops. He helped out the Ukrainian government with some type of fiat scheme. Ok, Ukraine is the place to be then.

Good thing both his parents are well-connected lawyers.

They are professors of law. His mother published papers on philosophy of law and his father economics, business, and taxation.

He needs a street smart criminal lawyer that would tell him to shut up.

Maury Levy or Saul Goodman would be best.

SBF apparently wanted to get in on the Twitter buyout with Elon:

https://danluu.com/elon-twitter-texts/#12

https://danluu.com/elon-twitter-texts/#62

I find it decently unlikely that anything serious happens to Bankman-Fried. There is a zero percent chance the people he helped funnel money into will see a whiff of an investigation.

The level of corruption is too high in US finance and politics for that to happen.

Crypto isn’t dead. It’s just getting started.

Fuck crypto the golden goose for venture capitals and Wall Street wannabes.

Some are here for the technology. May it all burn to the ground.

Would you think that this SBF guy will enjoy prison time?

we are so early

This whole story has an odd feeling to it. One has to wonder if a Bankman-Fried, with all of his connections, was the Trojan horse for the public outrage to ban crypto.

Agreed. The crypto industry is widely known for its transparency and trusted institutions, it's strange that this sort of fraud suddenly emerged from nowhere.

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