The Reason Washington Is Silent on the FTX Fiasco - Bipartisan Donations | Hacker News Reader

The Reason Washington Is Silent on the FTX Fiasco - Bipartisan Donations

politico.com

84 pointsalephnerd43 comments

Complain about what? Congress doesn't prosecute crimes, the DOJ does. It may take years for the DOJ to lock in a case, and unlike SBF, they aren't going to say jack shit until they've got him dead to rights.

Lack of DOJ prosecutorial authority never stopped Congress from complaining or dragging people in for show trials of public opinion.

The House or the Senate will happily subpoena folks to make the minority party look bad.

Bipartisan donations, though, would prevent that

As far as I'm aware, Congress is trying to haul in SBF to rake him over the coals--he's been asked to come in and testify, and there are threats of subpoenas if he doesn't want to.

He’s set to testify this week so we’ll be able to test these theories:

https://www.cnn.com/2022/12/09/investing/sbf-ftx-collapse-se...

Agree. DOJ head (forgot they guy's name) says we talk in court. We don't blab all over social media, tv. Good. Keep it formal. Keep it tight

I think you're right, plus 99% of the population couldn't care less about crypto or FTX going belly up and (probably) committing fraud, so it's also uninteresting to congress critters because it doesn't get votes or clout.

What’s the alternative the author is advocating for?

They lament that there isn’t motivation because it’s not a partisan scandal, but that seems like a good thing because then reactions aren’t clouded by two-party tribalism.

Also, naive politicians aligning themselves with (what they see as) an up and coming industry is not at all surprising, and certainly not new.

If they just want the donations returned, that sounds great, although I’m not sure how that works—-I guess the money goes to the bankruptcy pot to help cover investor losses? Not sure that even sounds that great either. As horrible as his must be for people who lost their money, I wouldn’t want my (imaginary) political donation to be immediately handed to some crypto investor who fell for FTX’s lies.

If the author just wants regulatory clarity, that’s what we all want.

Stolen money SBF sent to a political campaign isn't "your" money, unless you were a client he stole from.

Also agree here. Thank goodness for some common sense and groundedness.

FTX paid off journalists, too.[1][2]

"The Block is a cryptocurrency-focus media outlet that was originally founded in 2018 by Mike Dudas. In 2020, Michael McCaffrey became CEO of the company, and in 2021 he led a buyout to make the company employee-owned.... Now it has come to light that McCaffrey had actually taken a series of loans amounting to $43 million from Sam Bankman-Fried... The original $12 million loan was used for the company buyout. Another $15 million loan in January 2022 went towards company operations. A third $16 million loan was used... to buy personal real estate in the Bahamas."

Since those were set up as "loans", the FTX bankruptcy receivers will be around to collect.

More FTX-related crashes:

* Digital Surge (Australia) just went bust.

* Orthogonal Trading just went bust. "FTX exposure"

* Bankman-Fried's father has disappeared from the Stanford course listings. He was a professor.

In related news, federal prosecutors from the Southern District of New York met with FTX bankruptcy attorneys. So criminal charges are being considered. SDNY is probably the best-qualified group of prosecutors to handle this. They're famous in legal circles for untangling complicated large-scale scams and getting convictions. They've been doing it for over 200 years.[4] They've seen it all before and will not be confused by bullshit.

[1] https://web3isgoinggreat.com/

[2] https://www.axios.com/2022/12/09/bankman-fried-funded-crypto...

[3] https://www.bloomberg.com/news/articles/2022-12-08/ftx-bankr...

[4] https://www.justice.gov/usao-sdny/prosecuting-fraud

A related question is why journalists didn't blow this open months earlier. Coffeezilla did a video a couple weeks ago where he has Marc Cohodes accusing Bloomberg of spiking the story because it would be bad for (crypto) advertisers. I find the accusation credible, even though all we have is this guy's word, because them not getting the story is something that really needs to be explained.

[1]: https://youtu.be/FDqhM7vHR2o?t=885

Here’s a Bloomberg article that’s critical of FTX (specifically yield farming) from back in April: https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...

Long history of US journalists participating in coverups. https://www.rogerebert.com/reviews/mr-jones-movie-review-202...

SBF was a media darling so was treated gently. Communism was a NYT wish list, so the starvation was covered up.

https://www.nytco.com/company/prizes-awards/new-york-times-s...

I am skeptical of politicians and media.

This is the sad reality, and not just cover ups but actively disseminating known false information for propaganda purposes (speaking of NYT). And yet no matter how many times it happens - pointing it out gets you branded as one of those kinds of people.

I'm fine with that. At least we're right.

SBF says that he donated to Democrats publicly and to Republicans through some kind of back channels. He says he did it this way because he didn’t want the media scrutiny that might result from donating to Republicans.

Many commenters believe that SBF is lying about donating to Republicans. They say he is telling this lie because he has corrupted Democrats and wants to hide it, presumably to help him avoid punishment.

There is a straightforward way to resolve this: look at how Republicans behave. If SBF is lying, then Republicans are incentivized to make a lot of noise about his relationship with Democrats. If he is telling the truth, then you would expect Republicans not to sound the alarm on his Democratic donations, in case evidence comes out that he also gave to Republicans.

Salame openly donated half as much to republicans and supposedly additional through super PACs.

Maybe more important is the Bahamian side, he let leveraged users there draw out before people who were supposed to be fully backed in non-margin/futures accounts and explicitly said it was to ease the regulatory side of things.

>SBF is lying, then Republicans are incentivized to make a lot of noise about his relationship with Democrats.

Purely from his Wikipedia article, someone is making a lot of noise about his relationships with Democrats. More of the page is devoted to his political donations than to the bankruptcy.

Not quite the same, your regular Republican could be behind the edits and has no idea what their party leaders are up to.

His financial records should be under heavy scrutiny, I'm sure we'll get the specifics soon. And if we don't, then we know he was lying.

I am increasingly frustrated with the widespread reticence to use Sam Bankman-Fried's name online. It's not a particularly long name, nor difficult for any English speaker to spell. Don't honor him with a three letter initialism. Use his name so that his name may become associated with his crimes.

I presume when speaking about Sam Bankman-Fried 'IRL' with your voice rather than text, you don't say "Es Be Ef". Right? Shortening his name to fit in headlines is one thing, but I don't feel that's appropriate in the comment section.

I do it out of laziness

"SBF" and "Bankman-Freid" are the same number of syllables, and the name is unique enough that only Sam comes up when you search the last name.

That said, I don't really care about the story and "SBF" is easier to remember, particularly compared to spelling "Freid."

> Freid

It's pronounced as 'Freid' but spelled as 'Fried', as in "the bankman got fried" (being held over the coals.) That's how I remember it.

You'd think I'd notice Wikipedia telling me there's no pages with that term. Proves my point though, and I have no real need to remember it.

Indeed, in general, German words with "ei" or "ie" sound like the second letter. So "Lied" (song) is more like "leed", but "Leid" (suffering) is "lyed".

This is the reverse of how English pronounces "lied" as in the phrase "lied to investors".

> I presume when speaking about Sam Bankman-Fried 'IRL' with your voice rather than text, you don't say "Es Be Ef".

I do and would find it slightly weird not to.

From what I have heard, all television and radio media is calling him "Sam Bankman-Fried", not pronouncing the initialism.

That's what I'd expect from formats where the audience isn't expected to have as much knowledge of his online name.

> I presume when speaking about Sam Bankman-Fried 'IRL' with your voice rather than text, you don't say "Es Be Ef". Right?

I've heard lots of "SBF".

Maybe SBF is Sam Bankman-Fried's personal pronoun?

I mean most people don't care? SBF is a lot easier to remember and type. Not all of us type at 100+WPM. The TLA will be over when he's out of the news cycle.

I'm fairly sure all this "why isn't SBF in handcuffs already" stuff is just innuendo meant to make people like HNers have less faith in their government.

I'd be very surprised if there isn't stuff happening on the matter of FTX in DoJ.

It’s very strongly reminiscent of the people who were outraged that none of the J6 attackers were in prison yet, when everyone with any federal prosecution experience was saying “just wait, they don’t take chances on cases”. For something like this, I’d actually be more suspicious if they’d already acted since there’s no way that you could untangle something like this and even know who all to charge.

I was under the impression that FTX US wasn’t implicated yet and only FTX Bahamas was. While SBF likely broke US laws, it’ll take a while to investigate those and charge him.

Additionally, this didn’t really touch “mainstream” investors in the US.

Is that not right?

The big issue right now conflict of interest wise is that a number of legislators on both sides of the aisle haven't returned FTX donated money, and the CFTC bill that FTX lobbied for is still alive and well in the Senate. I'm not a crypto fan in any way, but opaque campaign financing is an issue that needs to be resolved.

'JumpCrisscross has written a bunch of good comments here about how overblown and silly SBF's supposed political influence is. It's mostly a talking point for him.

With a divided government for the next 2 years there's little chance of any serious legislation passing. New financial regulation? Even less of a prospect. Whatever bill FTX was advocating for, with their powerhouse of 8 congressional backbenchers, it's DOA now.

If the bill was conceived and introduced before SBF promised to donate, him making a donation should not have any effect on the passing.

The picture at the front of the article is SBF testifying in a house hearing. That's not "silent".

Um, from 2021, before the collapse, when he was considered an upstanding member of society etc.

And he'll be testifying again on Tuesday.

Or he won't

And even then, they're not calling for his arrest, they're politely asking him to come to their clubhouse...

tl;dr - the big issue right now on the Hill with regards to FTX is that a number of legislators on both sides of the aisle haven't returned FTX donated money, and the CFTC bill that FTX lobbied for is still alive and well in the Senate.

edited to fit HN commenting rules

Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that".

touché

Reply on news.ycombinator.com