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Comment by topspin | Hacker News Reader

> A few little prison-term sized problems

No one will ever see the inside of a prison off of this matter. FTX was deeply involved with powerful political contributors and those people can't be allowed to be subjected to depositions or other legal discovery. Key figures are on the lam and no one with the power to capture them will be tasked with doing so.

While the amounts involved are eye watering they are not large enough to destabilize to the US financial system, so the people involved need only resolve their various financial entanglements and wait for the story to expire out of the news cycle.

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Who do you figure can’t be allowed to get deposed and by whom?

Madoff was politically well connected and it didn’t save him in the end. Donating money in one cycle will not save SBF. Your idea that Democratic electeds and regulators are consistently loyal (to anyone, including large one hit wonder donors) doesn’t square with my experience. If anything Dem politicos have an opportunity to show their independence by pursuing Senate hearings and similar public fora of investigation because they have nothing to lose going after this broke man.

> Madoff

First, the Madoff Ponzi was an order of magnitude larger than FTX; large enough to actually matter to important institutions. Second, Madoff could be trusted not to name names and understood that no one really wanted him to and he would, therefore, not be asked to do so. Thus, he could be safely prosecuted. The chuckleheads of FTX are not made of the same material; no one knows what species of insects are under those rocks and no one wants to know.

And I didn't say anything about "Dems". According to this money got beamed to (R)s as well: https://www.foxbusiness.com/politics/ftx-founder-sam-bankman...

> No one will ever see the inside of a prison

One of the enduring myths SBF crafted was that of his political connections. I have barely any D.C. connections. SBF has none. He was paid attention to. But walking into D.C. with tens of millions to spend is far from unprecedented, and it's not the sort of behavior that buys secrets. (Meetings? Sure.)

Do you think FTX working with the SEC team on drafting new crypto regulations was all a lie then? No one else was allowed that access, as far as we know, and Coinbase has been complaining about being stonewalled by Gensler for even basic questions.

Kevin O'leary was saying how he was trying to raise the bailout funds from sovereign wealth funds, but that evaporated once it looked like FTX lost the support (or at least the blind eye) of the SEC.

> Do you think FTX working with the SEC team on drafting new crypto regulations was all a lie then? No one else was allowed that access

I'm not familiar with their claims. That said, the SEC is generally quite receptive to input when it comes to rule making.

> Coinbase has been complaining about being stonewalled by Gensler for even basic questions

Enforcement versus rule making. Also, tweeting angry things at your regulator while publicly trying to yank their jurisdiction is a poor way to solicit discretionary feedback.

Madoff was at one time being considered for a job at SEC, and regularly worked with them on issues unrelated to his business.[1] That probably postponed investigations that should have happened earlier. After the crash, it didn't help. Madoff went to jail and the SEC was investigated by Congress and its own inspector general.

“While examiners and investigators discovered suspicious information and evidence and caught Madoff in contradictions and inconsistencies, they either disregarded these concerns or relied inappropriately upon Madoff’s representations and documentation in dismissing them.” - SEC inspector general

A few SEC employees were disciplined internally, but none were fired.

[1] https://www.reuters.com/article/us-madoff-sec-remarks-idUKTR...

> FTX was deeply involved with powerful political contributors and those people can't be allowed to be subjected to depositions or other legal discovery.

I disagree, he was undoubtedly buying connections and influence, and a lot of the SEC/CFTC/Gensler stuff reeks of corruption, but I don't think he's been around long enough or acquired enough influence to stop heads from rolling.

My money is on him and maybe a few others eventually serving a few years. He'll then try to restore his image and start a new business with a promise of extreme transparency and altruistic purpose, but this time "with adult supervision". I honestly wouldn't be shocked if Sequoia invests in him again.

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