SBF Arrested by Bahamian Authorities
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Then again, he's been much more out in the open about everything. He pretty much laid the prosecution's case out to the public for them.
> But he would offer only limited details about the central questions swirling around him: whether FTX improperly used billions of dollars of customer funds to prop up a trading firm that he also founded, Alameda Research. The Justice Department and the S.E.C. are examining that relationship.
> Alameda had accumulated a large “margin position” on FTX, essentially meaning it had borrowed funds from the exchange, Mr. Bankman-Fried said. “It was substantially larger than I had thought it was,” he said. “And in fact the downside risk was very significant.” He said the size of the position was in the billions of dollars but declined to provide further details.
> Around the time the crypto market crashed this spring, Ms. Ellison explained, lenders moved to recall those loans, the person familiar with the meeting said. But the funds that Alameda had spent were no longer easily available, so the company used FTX customer funds to make the payments. Besides her and Mr. Bankman-Fried, she said, two other people knew about the arrangement: Mr. Singh and Mr. Wang.
https://www.nytimes.com/2022/11/14/technology/ftx-sam-bankma...
It was substantially larger than I had thought it was -- whoopsie!
the funds that Alameda had spent were no longer easily available (and why is that, hmmm?) , so the company used FTX customer funds to make the payment -- didnt want to, just rearranging some furniture!
Ha, After typing this I went to double checked my memory of the article. They literally refer to him as a villain in the first paragraph. Even my hyperbole can't stand up.
- No question about commingling funds between FTX and Alameda
- No question about his relationship with Alameda's CEO
- No mention of the tweets he deleted
Covers the first two. They refer to how intermingled they were several times. Its a major point of the article.
"He lived in a five-bedroom penthouse in the Albany resort’s Orchid building, with Ms. Ellison, Mr. Singh, Mr. Wang and six others. Mr. Bankman-Fried and Ms. Ellison were at times romantically involved, two people said." This covers point 3
It didn't mention the deleted tweets though but that's minor compared to everything else. Are we talking about different articles? This is the one I normally see people complaining about from them: https://www.nytimes.com/2022/11/14/technology/ftx-sam-bankma...
Despite not being present at the scene of any of the crimes, Manson, a victim of America's "cradle-to-prison pipeline" starting at age 5 when his parents were both incarcerated, and was allegedly raped at a reform school, was convicted on seven charges of first-degree murder. The prosecutors also conceded that Mr. Manson never directly instructed anybody to commit the murders, yet he was sentenced to death.
Manson, who earned a following preaching a unique, persuasive self-made philosophy based partly on the Bible, Dale Carnegie and the Beatles, has remained as perhaps the most popular and controversial criminal in the United States in the 20th Century.
By contrast imagine your motivation is to remain impartial, to say nothing of critical given your long-standing antagonism of billionaires and crypto, and here you have a billionaire player in crypto. Would you do things like press him on the discovered backdoors, where exactly the money went, illegalities of misappropriation, etc? Or would you simply take hand-waving deflectionary non-answers at face value, let alone publish them? Would you invite him to come speak alongside world leaders at an event you are hosting?
I think this might be the confusion between the two parties in this discussion. When people say 'puff piece', they don't just mean that they're engaged in mindless cheer-leading, but rather that they're taking a turd and instead of reporting on a turd, they're reporting on a diamond in the process of being made, while remaining aware of what the reader is going to see when they look at that 'diamond in the making.'
People think he should be punished by being ignored by the larger publications or something. He was still giving Twitter interviews with lots of popular crypto people all the time so I doubt it would have done anything.
Best bet for an ex-con is to bootstrap a crypto-native company anonymously, or a crypto trading firm. Given how Alameda went, more likely the former, but I suppose that's getting harder too.
Beachfront properties, random companies, journalists... but no Lamborghinis.
Got it.
Don't get me wrong though, I'd say 2008 was blamed a lot on an industry that largely played fairly outside of some truly revolting players. Letting too many bent actors get away with their misgivings emboldens the next generation, and you could certainly argue a lot of this next generation of bent actors are playing fast and loose in crypto.
How did any of that change exactly?
That 2008 style Wallstreet corruption is bigger than ever, it's just a matter of time before the world sees that the upcoming/ongoing inflation is not actually "due to the war in Europe and Covid".
The same political conflicts of interest exist, regardless of whether the funding comes from a carbon Super-PAC, or a crypto con man... But you wouldn't be able to tell that from any of the blatantly partisan rhetoric around it. It's all very "We're not mad that campaign funding works the way it does, we're mad that the other guys got more of it."
Trying to limit 'who' can contribute is fraught with violations of free speech or picking and choosing the definition of what a 'company' vs an 'organization' is.
'The Number of Representatives shall not exceed one for every thirty Thousand, but each State shall have at Least one Representative…” — U.S. Constitution, Article I, section 2, clause 3'
As it is now, they decided to stop.growing the House because ... big bribes to the controlled-by-lobbyists Reps.
That case is even murkier, but the intent seems clear.
Did I miss something?
He can claim it was just a mistake and an accounting error if he wants, but the judge and jury will have final say if he goes to jail.
It also sounds like alameda's job was to market make the FTX coin, which they presumably did with that money in part. And likely kept doing until they blew up.
He's a fraud. He knows he's a fraud, and his PR campaign is an attempt to prove he's not a fraud but instead just really really dumb and stuff. Because being dumb isn't illegal, but running a fraud is.
It's pretty easy to lose any amount of money if you're paying $10 for $5 bills.
Everything he's done since FTX first crashed has pretty much been straight out of the most fantastical dream any federal prosecutor has woken up from in the middle of the night, certain that no defendant on the planet would actually be that dumb.
Nit-pick: it very much can be. Being dumb can lead to gross negligence, which can be criminal.
[1] - https://www.forbes.com/sites/mattdurot/2022/11/17/sam-bankma...
He cashed out $300M at Series B and took a $1B loan from FTX. So yeah, ~10% went to Lambos and the rest of the $10B to his gambling habit.
I was on the jury of a federal fraud case, where the defendants took millions of dollars in customer funds and used it to make bad business decisions and/or placate earlier customers.
It was very clear to us that even though they lived a very simple life (old car, $1,500/month rented house), they wanted to build the biggest company in their industry, and fraudulently used their customer's funds to do it.
2. BBG news article recently speculated some hot-shot lawyers have begun representing Caroline.
Maybe the Alameda execs are trying to say they just made irresponsible gambles (like a shitty Wall St investor) but SBF is the one who secretly covered the massive losses with FTX customer assets without telling the public and was responsible for the "dual accounting" issue where deposits were counted twice. Among all the other things that they did wrong.
Or maybe there was a more direct/overt conspiracy at play they both took part in and she snitched first.
The good news is we'll probably find out sooner than expected if the extradition gets challenged in court. We'll see exactly how altruistic SBF really is soon.
Maybe part of the urgency was also the planned congressional testimony.
Citation needed? I'm not a lawyer, but it seems plausible to me that SBF's public admissions of crimes, plus the full records of his company, are sufficient.
But this, like most of the thread, is all speculation. We’ll find out more in due course.
Bankruptcy procedings. Subpoenas. The standard ways the FBI gets records from regular companies run by people who aren't criminals and don't want to become one (the current CEO is a regular business person).
But either way, these things take more time than what has passed thus far. I’m not saying that a case couldn’t have been made without an internal informant — just that it happening so quickly makes me suspect that someone (who was high up) flipped.
They can be, but they don’t have to be, and the current management doesn’t seem interested in protecting SBF or the others formerly responsible for running the FTX network of companies.
I’m sure he was more truthful in private signal or telegram chats amongst executives
It probably reflects the inherent risk-aversion that comes with a gov lawyer job.
A more balanced tolerance to risk is often missing from much of gov policy making. Probably has a lot to do with people who care more about highly visible and immediate prosecutions to satisfy the public > balanced long-term justice. Politics selects for that. You see the same thing happen on social media where emotions reign king.
there are long term benefits to encouraging conspirators to defect early and often, even if you don't strictly require them in a given case.
I think it's often less about convenience and more about prosecutor's political antennas. Who wants to see the guy dead in jail, and who would be most upset at you if that happened.
Here’s the crazy thing. Maybe they pierce the veil and say the two companies acted as one, but hedge funds fail all the time. The fraud was SBF using FTX to prop up Alameda…
“Piercing the veil” is a term of art for holding shareholders accountable for corporate liabilities notwithstanding the civil liability shield usually provided by the corporate form.
Holding coconspirators accountable for their role in a criminal conspiracy doesn’t have a special name because it is routine rather than exceptional.
Piercing the veil broadly refers to removing limited liability protections because the individuals behaved in such a way (criminally) that they have forfeited their protections.
The most common people held to limited liability protections are shareholders in limited liability corporations (LLCs)
A different sort of limited liability is the idea that customers/partners of a fraudulent business are not liable for that fraud, unless they committed gross negligence in allowing the fraud to continue.
To your point, there is not a snappy term for that specific phenomenon, because it is so rare, but piercing the veil 100% applies here because it refers to the “veil of limited liability”.
There is no “limited liability” for criminal sanction to which the term applies. There are criminal immunities, but finding something to be within an exception to one is not called “piercing the veil” in any context.
> A different sort of limited liability is the idea that customers/partners of a fraudulent business are not liable for that fraud
“People other the person committing a wrong are not liable for the wrong” is not generally a “form of limited liability”; it is the basic rule of initial liability. An exception to that is respondeat superior in which a principle is responsible for his agents liability in a broad range of circumstances, and corporate limited liability is an exception to that, since the corporation could otherwise be seen as an agent for its shareholders.
Finding that someone committed a wrong related to a third-party wrong that makes them vicariously liable for that third-party wrong is not generally called “piercing the veil”.
And that’s all in civil liability, which is the only domain where “piercing the veil” applies at all.
> To your point, there is not a snappy term for that specific phenomenon, because it is so rare
No, again, charging co-conspirators in a criminal conspiracy, regardless of their other business relations to each other, isn’t “rare”, has nothing to do with “gross negligence”; it doesn’t have (another) snappy name because its central to the point of the crime of conspiracy.
Huh? My dude, she didn’t work for FTX.
If you’re saying that she in fact did (and was therefore a co-conspirator), then we agree that FTX was a sham corporation that acted on behalf of Alameda, but then why are we here?
Oh yeah, because you wanted to sound smart without fully understanding a situation; I guess I already knew that.
You're supposed to count everything twice in corresponding accounts. That's double-entry accounting.
The badly labeled @fiat account ... ? I am still in awe over that 11yo's soda stand spreadsheet.
She was staying completely silent since the moment FTX collapsed while he was spilling the beans everywhere. She obviously cut a deal while he was parading on social media for god knows what reason instead of shutting his mouth. SBF is a complete moron who didn't understand how the party was already over for him, I put it on his upbringing given the kind of ideology his scholar parents preach at university, especially the bits about personal responsibility...
Matt Levine:
> “Sam Bankman-Fried Should Shut Up, Bernie Madoff’s Lawyer Says,” (...) perhaps it is one more case of us watching in real time as crypto re-learns the lessons of traditional finance. Maybe in six months all the busted crypto leaders will be saying “oh wow we should not have given all those interviews.”
But you have to look at the larger picture: The Federal prosectuion conviction rate is 95%. The Federal government is very good at getting prosectuions in cases they choose to prosecute. They tend to plea out cases that are riskier. A key tactic in doing this is they get one or more cooperating witnesses. That witness gets a better deal in exchange for their testimony that pretty much turns the case into a lock.
It's classic Prisoner's Dilemma. The first to take the deal is always the best off. Lawyers know it so if their clients are at risk, they'll tend to push their clients to be the one to take it. Ellison will most likely have direct knowlege of the situation and will be able to produce evidence such as emails and texts.
Importantly, she's not the main guy. It's SBF who opened up custodial assets to be used in that way (or so it seems). That's the primary offence here. It's a bit like how in a murder case the cooperating witness might be a driver or a witness but unlikely to be the actual shooter. They may get embroiled in a felony murder conviction otherwise thanks to the US-specific pecularity (and some, including myself, would call a miscarriage of justice) of felony murder but that's another story.
So Ellison fits the profile of an ideal cooperating witness, there's supporting circumstancial evidence and the fact that Federal prosecutors indicted SBF so quickly further suggests a cooperating witness with firsthand khowledge or they'd otherwise be mired in subpoenas for communications, conducting interviews and otherwise building a case.
A criminal indictment represents the end of the investigation, not the beginning. SDNY has already built their case to their satisfaction. People seem to think an arrest happens and the investigation continues. That's not how Federal prosecutions works.
SBF’s situation is different in that the game ends as soon as someone defects.
That's why underlings have strong incentives to defect, and defect quickly. (Defection is also rarely an option for the person at the top of the pyramid.)
Caroline's option to save Caroline regardless of what Sam does by testifying looks a lot better.
Consider the payoff matrix in this example, somewhat analogous to the case we're describing:
- Both defect -> both go to prison for life
- One defects, one cooperates -> the cooperating one goes to prison for life; the defector gets some minor punishment and otherwise goes free.
- Both cooperate -> both go free for a moment, spend some months or maybe even a few years living in fear, then with 95% chance go to prison for life. That's because the whole deal is about saving work for the Feds, but they will put in that work if needed, and come back with bullet-proof case.
There's hardly anything they can do to meaningfully increase their chances of surviving the "both cooperate" option, so the two prisoners will both try to defect.
This isn't necessarily the case. The Feds convict on 95% of the cases they decide to prosecute. Which means that they decide not to prosecute marginal cases.
It could be the case that there just isn't enough evidence to bury them.
But even if not, then have the prisoners multiply that 95% by whatever they believe is the chance Feds will eventually prosecute. Is it 50/50? That just gives them 52% chance of avoiding spending rest of their lives in prison, which is still not a good bet.
(Note that prisoners won't be unbiased here - the Feds will be trying to make them believe this chance is much higher than it really is.)
There is a third factor here, whether the prisoners can disappear before Feds go after them - I assumed they effectively can't, and/or it comes with sacrifices so big that it's not much different than prison.
Crucially, these particular prisoners have a very good idea of whether the Feds have enough evidence to go to trial (assuming the Feds get everything, which is probably prudent to assume). Especially with the advice of good council, which they apparently can afford.
> Note that prisoners won't be unbiased here - the Feds will be trying to make them believe this chance is much higher than it really is.
Which is mitigated by the advice of council. Of course, there is a chance that they are influenced too far in the opposite direction - their layers may be banking on raking in fees from going to trial.
That's the kicker though, and it's the lever the dilemma orchestrators (here, the Feds) have to force a result: smooth out any real-life considerations by making the payoff matrix more extreme. If the cost of failure is life in prison, "slightly increase" and "won't always work" isn't gonna cut it - they can practically guarantee the prisoners will make a specific choice.
https://www.amazon.com/Chickenshit-Club-Department-Prosecute...
That's oversimplified, especially when dealing with wide ranging investigations into complex issues, as the many indictments (including successive, either superceding or in different districts or, in some cases, both) indictments of the same party in the course of, for an obvious recent example, the Mueller investigation attest.
If they wanted her cooperation, but didn't absolutely need it, they may have struck a cooperation deal in which she still sees some prison time, but a lot less than she would have after a full prosecution.
My gut says that because he was so sloppy in implicating himself, that DOJ may not have strictly needed her, and so total immunity for her is unlikely.
The witness is supposed to say they cooperated because the law provides lighter sentences for those who cooperate voluntarily.
The informal one is basically just telling (some of) the truth during interrogation and agreeing to testify, where her lawyer gets to enter “she cooperated” as evidence during sentencing, but she might still get off scott free, or a judge might ignore the cooperation entirely if she’s found guilty. If SBF pleas guilty anyway, this cooperation is pretty much useless but carries the most credibility.
She can cooperate as part of a guilty plea [1] in which case the prosecutor provides the judge with a sentencing recommendation. The judge can still sentence her within the guidelines at his discretion, though usually the plea deal is on a smaller set of charges than the indictment so its a net win regardless and brings double jeopardy into play since it counts as a conviction.
The last kind is total immunity which sounds nice in theory but is more dangerous for both sides. She’d have to spill all of the beans on everything within the bounds of her immunity which will be broad. If she is ever caught in a lie or a deliberate omission, the immunity deal flies out the window and everything she said as part of the deal can be used against her at trial. Waiving one’s 5th amendment rights is usually a stipulation of immunity agreements - total honesty or guaranteed prison time.
It remains to be seen how much she is cooperating.
Edit: [1] turns out the DoJ has several different types of plea agreements and even a handy guide: https://www.ojp.gov/ncjrs/virtual-library/abstracts/basic-gu...
Strongly disagree with this. Look at how they threw the book at Elizabeth Holmes (vs, say, Adam Neumann, or any other male founder from the last decade plus). If anything women have been getting it harder.
There are plenty of male founders who got popped for fraud. Trevor Milton (of Nikola infamy) is an easy one that comes to mind.
Jeff Skilling (Enron) served 12 years.
Ken Lay (Enron) died before sentencing, but was facing up to 45 years.
Bernard Ebbers (Worldcom) served 13 years.
I can't think of a reason offhand to compare her to Neumann and not Sunny Balwani.
Can you explain further?
For example, selling some of his wework shares, buying office buildings, then leasing the buildings back to wework at above-market rates. Registering the 'We' trademark for himself then selling it to wework. That would be illegal due to being a conflict of interest, were the company publicly traded - but it wasn't.
(There was also drug use and sexual assault claims)
from: https://news.bitcoin.com/document-claims-alameda-ceo-carolin...
"...Alameda Research CEO Caroline Ellison’s personal account was in the hole by $1.31 billion in May 2022."
I don’t think this is being reported correctly - it’s not her personal account most likely Alameda.
I think Ellison will get off scot free since she only controlled Alameda, and not entirely. Her crimes are probably minor and worth forgiving for her testimony. At least that’s my hot take.
But it's quite possible that after the DOJ finishes twisting enough thumbs, they will have a stronger case against her than you or I do.
If Alameda executives knew that FTX customer funds were being commingled with Alameda’s then they were well aware their source of capital was from customer money they shouldn’t have been touching. It’s not just that they were given unlimited margin from FTX.
I've seen considerable evidence that the FTX empire, including Alameda, was jointly run by a narrow set of leaders, in which Caroline was #2, not a set of separate, arms length enterprises.
No way Ellison is getting off scot free. I'd expect her to get a huge reduction in her sentence, but would still be shocked if she got no jail time.
It has been reported that there was a meeting that included SBF, Ellison and the other high ups at FTX where the decision was deliberately, explicitly made that Alameda would use customer funds to prop itself up. That is most definitely a crime on Ellison's part if true.
> which is, in and of itself, insane because FTT worked more like a stock of FTX itself - a company doesn't put its own stock on the asset side of the balance sheet
Thinking about it, it makes sense. But I never did before. So where does a company’s own stock normally end up at, balance-wise?
The company’s own stock is in the equity section (treasury stock – stock that the company has repurchased after it was issued is a contra equity account, since the act of purchasing reduces stockholder equity.)
Though I would disagree that FTT really functioned equivalently to ownership shares.
* FTX's success was helped a lot by the reputation of Sam and Alameda as the best of the best * Alameda bankruptcy proceedings would have unveiled some skeletons, like the unlimited borrowing of user funds (confirmed by court filing recently)
This is most definitely a hot take.
Sam Trabucco - now there is a name you never hear ... yet he was CEO and left 2 months before they went bankrupt ...
Granted they technically have no fiduciary duty to users since nobody signed a contract with them, I doubt they get off scott free.
Many news outlets reported this. She participated on the crime
At the very least she will be deemed unfit or proper, which means she will be barred from any financial activity for the years to come.
On top of that, as a MOO & RO she will be professionally and personally liable to millions in fines, and most likely jail time.
Negligence _is_ a crime, a lack of means _is_ a crime, a lack of knowledge or control are crimes as well, for any regulated person, especially at the MOO/RO level, a lack of chinese wall between investment and retail is a crime, accepting money from an unverified source is akin to money laundering for an investment firm.
Edit: MOO, ROs (responsible officers) and MICs (managers in charge) are regulated activities that should be assigned to individuals performing specific duties in an investment fund. Each regulator will have different names and variations on their duties and structure, but overall it's pretty much aligned.
It is mandatory for a regulated firm to have a specific amount and hierarchy of these regulated activities, and each one of them comes with a set of duties.
These activities are the main vector by which regulators enforce and control individual managers.
MOO is often assigned to the CEO. ROs are often the key investment officers, and MICs are often the key tech & operation officers.
Edit2: Hedge funds are no less regulated than any other investment firm. You are mixing "prop shops"/"family offices" and hedge funds.
Alameda was definitely an asset manager as it received external funds and was selling (debt) securities.
Hedge funds are not magic places where you can say teehee i just used money I found
I’m not saying she’s fully innocent, maybe there’s some incriminating text messages or something, but from the public information so far it doesn’t seem cut and dry to convict her of a serious crime.
These are not only for customer protection, but anti money laundering as well.
Small regulators often overlook the client risk part so as to attract foreign money (that's why most of these regulators will be OK with little to no restriction of derivatives). The anti money laundering part though is very important for these small regulators as they could be fined internationally and don't want the bad publicity.
You cannot just "accept money and trust its from a legitimate source".
Well if you look at what the mainstream media are saying, the very same mainstream media who were presenting SBF as the second coming of the Christ on their front cover, you're not looking very much.
For a start it's proven that some people who wanted to send hefty sum of money to FTX had to wire it to Alameda to dodge controls. That's wire fraud.
Then it's clear that Alameda manipulated the market and were the ones behind the pump and dumping of several shitcoins. Including several shitcoins of SBF's creation.
But really... People who actually called SBF for the ponzi boy and FTX and Alameda for the complete ponzis they were, months or even years before they failed, have lots of evidence that Alameda was part of a bigger criminal operation, before FTX even existed.
If you really believe it's a coincidence the top lawyers at FTX and Bitfinex happened to be colleague at a company caught in an online poker cheating scandal I've got a bridge to sell you.
From the very start even just the naming of Alameda as "Alameda Research" was part of the con (SBF says on video he added "research" to dodge banking restrictions more easily).
The goal of Alameda Research was, from day one, to engage in criminal activities.
This entire "leveraged trade gone wrong" is lies, lies and more lies, relayed by certain media (once again: the same who were presenting SBF as an altruistic genius that was going to save the world).
Now maybe that Alameda also fucked up trades but I'm pretty sure that a lot of the missing billions mysteriously ended up at the hands of those behind the iFined/tether/Bitfinex/Deltec cartel.
Funnily enough this may make tether a bit more backed now.
One of the latest development btw is that one of the shareholder of Bitfinex is a now convicted money launderer (China just arrested sixty people in relation with chinese mafia money laundering through stashes of cash that found their way to Hong Kong and then were exchanged for USDT: $1.7 bn at least).
FTX / Alameda are one and the same and it's highly likely they were just a front for tether, with SBF as the useful idiot.
Some are going to say: "there's no evidence" but this entire thing stinks.
And nobody will convince me that Alameda didn't commit any crime.
Alameda, just like Moonstone bank (bought by SBF from Deltec) and the tens if not hundreds of companies SBF had, were part of a criminal operation.
Did she get any special loans or other gifts from FTX like SBF's parents got a free condo in the Bahamas ???.
[1] https://www.bop.gov/about/statistics/statistics_inmate_gende...
Nothing about justice requires that punishment be meted out in strict accordance with the demographic breakdown of a population except insofar as wrong things are done in strict accordance with the same demographic categories.
Maybe you're assuming that to be the case, but I don't think you'll find any evidence to support such a claim.
Why is it ok for 'spaulding to just shut down the argument as "nothing about justice requires that punishment be meted out in strict accordance with demographic breakdown" but suddenly a fallacy when I insert an actual demographic? I knew it would make people upset because well if we're talking about men then no defense is necessary, no woodruffw to the rescue with "affirming the consequent", but if black people cue up the folks with the torches.
https://slatestarcodex.com/2014/11/25/race-and-justice-much-...
2) That's not how logic works. Correlation does not equate to causation.
The argument isn't either "valid or not" in a general sense. The argument needs more nuance and if that's your concern, ask for it and point out where it is lacking. Demand better comments instead of trying a quick mic drop.
[0] Most people aren't confused with spurious correlations like: US technology funding vs number of hangings. (99.8% correlated) http://tylervigen.com/spurious-correlations
See how the causal factors in these arguments are different? The former is a demonstration of an unfair set of opportunities that disproportionately affects a certain subset of humans while the latter says that the arrests are destined because of genetic makeup. We know one is true and the other is false.
If you're making arguments akin to the former and getting called a Nazi, get off Twitter and touch some grass. Talk to some real people. Specifically people of color. But maybe listen first before you open your mouth.
These are people who literally start every discussion with the idea that people of different races should be treated differently based on the color of their skin. So I suspect they're projecting a bit, since that is precisely Nazi ideology cloaked in a different skin (literally).
Yes, because if we don't, then it does lead to what's been on display (which is also a selection bias). Start with the assumption of good intentions, but you don't have to keep that after they play their hand.
> A general rule of thumb is that anybody engaged in identity politics is a horrible human being, and discussion with them is generally an exercise in futility.
I found the problem. If you treat everyone you meet like an asshole or terrible person then it is no wonder they respond that way. You can't expect anyone to be nice to you if you are being a dick to them. People can tell what you think of them. You probably aren't as good of a bluff as you think you are.
I happen to think we should treat everyone the same regardless of skin color. Do you?
Is the explanation right in this case but wrong in that. Right in both? Wrong in both?
Is one of many articles on the topic. I had an old textbook (maybe 2003) textbook on markets and trading that had a sidebar that lionized him but almost everything on the web is colored by his scam.
That may have been revised down to 3 from 6...
I just learned that people have been theorizing on the internet that Caroline Ellison is Gary Gensler's daughter, which is completely nuts and totally false.
From The Verge article about the arrest of Bankman-Fried ( https://www.theverge.com/2022/12/12/23506483/sam-bankman-fri... ) :
John J. Ray III, who has taken over for Bankman-Fried as CEO of FTX and whose credentials include supervising the corporate cleanup after Enron imploded, has already said, 'Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.'
Source on pay: FT.com -> https://www.ft.com/content/5d826ca9-389e-41ec-a38b-da43211da...
FTX disclosed in court papers that Ray was billing his time at $1,300 an hour and had been paid a $200k retainer fee.FTX US had (at least) nine board members. FTX International (non-US entity) was private, as I understand, and essentially unregulated, so who cares about the board.
[1] https://futurism.com/the-byte/sbf-caroline-ellison-allegedly... and elsewhere
https://www.nytimes.com/2022/12/07/business/ftx-sbf-crypto-m...
Getting one of two culpable people to testify against the other and let them off the hook seems a dreadfully lazy approach to prosecution.
If you've just got wiped out financially? Unless they can expect donations from your allies, or from your peers in industry who are eager to see you released, they can just stop returning your calls.
https://www.youtube.com/watch?v=2ivqzyjfHG0
he walks through a lot of how the points are calculated.
You think there are only took culpable parties here?
With Holmes the prosecution probably had to do a hell of a lot of legwork to prove crap like intent, damage, etc.
I dunno. Wonder what other people think.
Seems the investors of FTX never asked for a detailed balance sheet. Companies that FTX bought out were often compensated with significant strings attached.
Holmes at Theranos was giving investors tours of it all working while doing it manually and with more blood behind a curtain.
From the WSJ:
https://archive.ph/2022.12.12-111902/https://www.wsj.com/amp...
This guy had a big mouth and poor motor control over his tongue. Who knew what he would spew? Maxine is relieved, is my opinion.
https://www.pointoforder.com/2013/05/22/taking-the-fifth-bef...
I no nothing about law, but I can imagine the pressure on Southern District to act after the cast was outlayed so well in social media.
Madoff was less than 11 days after discovery of his fraud:
https://www.theguardian.com/business/2009/mar/12/bernard-mad...
[1] Then following that admission with "and if people just give me another 8 billion dollars, I can fix everything" does perhaps point to him being a bit out of it. Or looking for the dumbest of marks.
But his admissions and the public and transparent nature of the fraud are effectively equivalent. Anyway, now that action is being taken I’m placated :)
Madoff was arrested before the news broke.
And Madoff was more out in the open. He confessed everything to his sons, and the very next day he was arrested.
I hope this is a lesson to those who think they can just talk their way out of things. The moral arc of the universe is long, but it bends toward justice.
Still surprised they moved that fast, I thought they'll wait for a demand from the DoJ.
Edit: According to vice.com, the US asked for his arrest.
Feds were probably gathering evidence from Day 1, and the restructuring CEO seems to have found it: https://docs.house.gov/meetings/BA/BA00/20221213/115246/HHRG...
"Yaffe-Bellany says Bankman-Fried stayed on the line for over an hour – and yet there are no direct quotes concerning the conflict of interest between FTX and Alameda, neither a confirmation or denial that SBF illegally commingled funds between the two or further admissions of guilt. There's little sense SBF, who stepped down from the exchange, is taking responsibility for the situation.
But, what, you want SBF to perjure himself? It’s a shame that Yaffe-Bellany wrote about Bankman-Fried’s cryptic Twitter thread, rather than the tweets he has been deleting. It sucks we know nothing more about the Bahamian withdrawals FTX opened, claiming it was at the behest of the island nation’s securities regulator – which the agency debunked."
> The NYT profiles I've seen is pretty clear that Alameda and FTX were mingling customer funds, that he refused to answer questions about the handling of funds, and that he was under investigation.
>> But he would offer only limited details about the central questions swirling around him: whether FTX improperly used billions of dollars of customer funds to prop up a trading firm that he also founded, Alameda Research. The Justice Department and the S.E.C. are examining that relationship.
OK no quote, but if there's no information why should they quote three repeated "no comments"? If he did not answer the question there's nothing quotable there, that doesn't make it a puff piece.
Maybe coinbase has political motivation to call reporting from certain media puff pieces?
- commingling of funds between Alameda and FTX
- conflicts of interest between the two, including SBF's relationship with the CEO
- use of customer deposits to pay off loans for Alameda
- that FTX and SBF are under investigation
If you want to compare tone, you can look up any NYT article on FB https://www.nytimes.com/topic/company/facebook-inc.
If you want something specific to compare, just take a look at the headline/subtitle which about as far as most people get in any article.
That's because describing it as "deliberate fraud" would require evidence of intent that they don't have. I agree that it's likely the case, but I wouldn't expect a journalist to state it as fact at this point.
FTX firm headed by SBF collapses after failing to process user withdrawals. Mismanaged funds and risky trades are to blame. Victims and prominent figures within the crytposphere allege fraud.
Funny how when it comes to most stories, "Business is killing babies... says person (random person on twitter)" is good enough.
It’s kind of how we got one of our recent presidents…
Ignoring that he also donated to Republicans. This is all part of that narrative - substantiated or otherwise.
So instead of people taking a close look at the crypto space and saying "wait, maybe a lot of these other projects are flawed", their anger gets focused on the press and the regulators. It's pretty ridiculous when you think about it -- is the NYTimes really responsible for FTX because the tone of their pieces wasn't sufficiently harsh? I'm skeptical.
It's as if SBF lawyers handed NYT a list of questions to ask and nothing more.
SORKIN: I think the question is whether you supposed to have access to these accounts to begin with. If I worked at a bank and was a bank teller and I decided to leave the bank at the end of the evening and take the cash that I ostensibly had access to, even if I intended to bring it back to the bank later or with even more money to give them back — I still stole that money.
The full transcript is here: https://www.nytimes.com/2022/12/01/business/dealbook/sam-ban...
"The Rise and Fall of Respectability":
Seems SBF won’t be attending after all…
> Damian Williams, the U.S. Attorney for the Southern District of New York, said on Twitter that the federal government anticipated moving to “unseal the indictment in the morning.” The charges include wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering, according to the New York Times, citing a person familiar with the matter.
> Meanwhile, the Securities and Exchange Commission has initiated a separate set of charges against Bankman-Fried, relating to “violations of our securities laws, which will be filed publicly tomorrow in the Southern District of New York,” enforcement director Gurbir Grewal said in a statement.
Source: https://www.cnbc.com/2022/12/12/ftx-founder-sam-bankman-frie...
I think most of these engineers are interested in the high compensation that the blockchain space has been able to offer so far. If high compensations disappear, I suspect engineers will switch too.
Bad actors will keep on existing as long as crypto is useful, which it will remain for the foreseeable future, specially considering the ever more restrictive personal banking regulations.
If you flush these particular bad actors, others will simply take their place
Once you take the utility of a product away it becomes worthless.
First because it seems that everything needs to be flushed out. FTX was highly regarded. Binance is the largest exchange. What shouldn’t be flushed by that logic? Bitcoin? Maybe Ethereum?
It also makes a weirdly naive distinction, between the « good actors », people who are selflessly coding and building things for the good of humanity (and who also don’t exist), and the « bad actors », who are there for hidden motives.
Why is crypto the only place where people make this distinction? We don’t make it for banks, or coffee shops, or car makers, with fantasmatic and ephemeral « good actors» (where nobody agrees on which they are) and bad self-interested bad actors.
And secondly because it doesn’t work like that. Bad things don’t get flushed until the good remains. Newer bad things come and replace them, on and on, until things get regulated.
In certain other large counties, this man would either be protected or jailed depending on what party he aligns to. Sure, you can say the same for USA, but with far less immediacy. Over time things tend to sort themselves out.
Compare that to being vanished, and/or having your family roped in.
SBF is a crazy character, he somehow must have thought he was above it all. If he'd done what all these finance companies do, scamming the little man, he'd probably still be free. Alex Mashinsky yet has to be arrested for example. And people like Vladimir Tenev aren't even prosecuted, many of them get off with a slap on the wrist.
The elephants in the room are Binance and Tether, together with certain high-profile investors. Taking some of these out could likely be worth a plea bargain. (For optics, he has to go to jail. But sending him to jail for a long time while letting the others go free for lack of evidence is a bad trade.)
TBH I don't think the interviews hurt him much, and I think more than likely they are a strategy trying to reduce his culpability. The common thread among all his interviews is "I'm really sorry for being such an idiot", basically trying to play stupid to make it difficult to prove intent.
The fact that he’s done this would give his stupid guy story credence... if there wasn’t already a boatload of other evidence that he’s a conman.
> Binance and Tether
Binance is the elephant in the room. They might have their finances in order, however. The fact that they were enabling shady deals doesn't mean they were cooking their own books. For Tether, I think it's more solid than you think. These guys have been cooperating with NYAG from day one.
Yet these raised no red flags, and were even cited as proof of their genius, how this time it is different - you can pitch at a 30bn valuation while tripping on drugs and playing a game at the same time. Genius (or Idiot?)
Additionally, the US claims jurisdiction on pretty much anything that touches the US financial system. It's how the US can exert pressure on, say, European banks (eg the Swiss settlements for withholding taxes for US citizens).
Given the scale of the fraud (ie $billions), I honestly expect him to spend the rest of his life in prison. It's that large and that egregious. Was it worth it?
I'm curious to find out if Caroline Ellison was (or will be) a cooperating witness in this case as some speculated when she was spotted in a Starbucks recently in Lower Manhattan close to the SDNY office.
Yeah a lot of people are saying this and citing Madoff for comparison. I guess we'll all wait 2 years and see, but I doubt he's getting this kind of time.
How similar can he make his story look to Nick Leeson's? He'll say he just got in over his head, tried to trade his way out of it, used funds he shouldn't have and lost in his gambles. Leeson got 6 1/2 and served 4. My prediction is SBF gets 11 and serves 7 or so.
> me: how do I signal my genuinely sweet and feminine nature on my dating profile? should it go before or after the section on wire fraud
Chat was named “the cartel”
Ended up being a slap on the wrist and the public collectively forgot the largest financial scandal in history happened.
> Legal experts told CNBC that if the federal government pursues wire or bank fraud charges, Bankman-Fried could face life in prison without the possibility of supervised release. Such a severe punishment would be unusual but not extraordinary. Ponzi scheme mastermind Bernie Madoff was sentenced to 150 years in prison, an effective life sentence, for his massive ponzi scheme. ...
https://www.cnbc.com/2022/12/12/ftx-founder-sam-bankman-frie...
Federal sentencing is actually really easy to predict. You can almost always ignore the proclamations of “could be 130 years” since those are often only for serious repeat offenders and tons of sentencing enhancements.
Skip down to the process part of this post:
https://prisonprofessors.com/calculating-holmes-prison-sente...
Once we know what SBF is going to be charged with, we’ll know what his eventual sentencing range will be if he’s convicted. For all of the conspiracy theorizing and dramatics, it boils down to a very boring sentencing chart.
Is it really that obvious? I know the Federal Sentencing Guidelines have some wiggle room and gray areas, but I do know for financial crimes the length of sentence is largely proportional to the amount of money involved - not linearly proportional, mind you, but given that around 8 billion was stolen, definitely seems like life is on the table.
That said, I agree with your "nor should he" statement. The money is gone, and SBF rotting in jail for the rest of his life isn't going to bring it back. I do think he deserves to spend a long, long time in jail, but will it really have any more significant deterrent effect if he gets out at, say, age 65 vs. dying in jail?
If you squint, you can maybe get to 37-40 points if they do get him for over $1 billion -- which is a serious sentence! But more on the order of 19-24 years.
https://techcrunch.com/2022/12/12/sbf-scheduled-to-testify-t...
Nope, it doesn't make any sense to arrest him if the goal was to force him to testify in front of congress. Once he is placed under arrest then I'm pretty sure the house cannot make him testify if he is in custody, he becomes at the mercy of a judge and I imagine bail conditions will not allow him to talk in public about the case either.
Also, it what universe would bail make sense for such an obvious flight risk?
As for flight risk the Bahamas had previously confiscated his passport and he wasn't able to get himself smuggled out in the last 2 weeks so he doesn't appear hugely flighty, but then again knowing that he's being formally charged may change that.
Bail is a US thing for: when you're arrested and charged with a crime, you're not necessarily going to sit in jail until trial. You are either let go or you pay money (bail) to decrease the chance you'll flee. If you can't pay bail or bail is refused by the judge, you sit in jail.
SBF hasn't been charged yet. Bahamas arrested him for the sole purpose of preventing him from fleeing because U.S. indicated that they'll charge him and will want to extradite him to U.S.
I don't know if Bahamas even has a concept of bail but it doesn't apply here and wouldn't make sense to let him out.
I think they can since they have vast subpoena power. SBF, however, can plead the 5th -- which would make it nothing more than a TV spectacle.
I don't know why a house subpoena would be any different.
If you are out on bail, I have never heard of bail conditions restricting what someone can say, that's not what bail is, I don't think that's even a thing. Judges in the case do sometimes put "gag orders" on the parties involved, but that's not related to bail.
Where are you getting this information?
He's perhaps unlikely to be testifying to the house tomorrow though, when he's been arrested in the bahamas. Probably just as a practical matter he needs to be extradicted to US custody and processed first.
I think the point the GP is trying to make is that his arrest does not obligate him to testify in front of anyone: his "right to remain silent" and all that. Prior to being arrested, voluntarily testifying (or complying with a subpoena to do so) before Congress could have been useful to him if he could manipulate things well enough to get the heat turned down. (I don't think he'd actually be successful at that, but that's another story.)
Now that he's in jail, he may actually listen to the advice I'm sure his lawyer has been giving him all along: shut the hell up. And he's perfectly within his rights to do that. Even if he is hauled before Congress, he can simply assert his 5th Amendment rights after every question, and that might actually be the best move for him now.
Edit: re-reading the GP, I realize what you were objecting to, the "I'm pretty sure the house cannot make him testify if he is in custody" bit; I agree with you in that I don't think that's the case. Still, though, even if Congress can force him to testify, they can't actually force him to answer questions. They technically couldn't do that before, but now that he's been arrested it's likely even less in his best interests to talk.
Is there anyway the arrest is in response to the refusal to testify? Or just coincidental timing?
> Nearly all of these situations share common characteristics, ranging from gross mismanagement, excessive leverage, failures of internal controls, failures of external checks as a result of audit firm failures, or insufficient board governance. But never in my career have I seen such an utter failure of corporate controls at every level of an organization, from the lack of financial statements to a complete failure of any internal controls or governance whatsoever."\
Most white-collar criminals are released on bail. But after extradition, it's different.[1]
"The Bail Reform Act ... and the attendant presumption in favor of bail for persons facing trial, apply only to criminal defendants and are inapplicable to fugitives facing extradition proceedings. Because of the potential harm to the country's international relations that could result from flight, there is a presumption against bail in international extradition cases"
This is a downside of operating offshore to try to evade regulation.
[1] https://www.justice.gov/archives/jm/criminal-resource-manual...
"fugitive" assumes he is/was 'running from the law', which I don't believe he is/was.
> There was no warrant out for his arrest until now.
I think there was, if not in the United States then in the Bahamas. From https://www.wsj.com/articles/ftx-founder-samuel-bankman-frie...:
> FTX founder Sam Bankman-Fried has been arrested in the Bahamas after the U.S. filed criminal charges that it expects to unseal Tuesday morning, the authorities in the two countries said Monday evening.
Hence the mention of international relations.
2. The US has refused to draft clear legislation regarding how to operate a crypto company in the US, effectively forcing all interested parties to take the route described in point 1.
A crypto company could set itself up as a stock broker/dealer. Robinhood has done that.
There's clear legislation. It's just that the marginal players don't like it. They wouldn't get past the initial requirements.
Not learning from the mistakes the first time and allowing history to repeat itself for no reason is the tragedy, IMHO
Does being from MIT actually mean anything?
In my country we don't really have a university that people would great about or that would how any special status, at least not that I would know of.
Let's just keep being irrational. We are just writing comments, not sharing real information.
Why would the Bahamian government risk their relations with the US over someone like SBF? Kinda absurd...
It also says the US has filed criminal charges, which is the first I'm hearing of this.
As an aside - anyone else think it makes congress appear weak to still be allowing people to remotely testify? They supposedly are the most powerful and important legislative body in the land, perhaps the world - yet they can't compel people to show up in person and treat the event with the deference it's supposed to deserve?
Congress is in session - meeting in person. Why should people be allowed to remotely testify at this point? It's congress - show up in person, it's important.
Not really. Not being compelled to testify against yourself is also one of the most important rights this country has enshrined.
Congress isn't a court, and he was not testifying because congress arrested him or anything - it doesn't work that way.
He was going to testify - and a lot of people testify in front of congress all the time. But you used to have to do it in person until the pandemic. Now that congress is back to in-person session - so should the people who are testifying.
SBF was going to testify. He was going to do it remotely.
My issue is remotely was not an option before the pandemic. It was allowed during the pandemic for good reason, but now that reason doesn't exist anymore. Therefore, remote testifying should not be allowed anymore either...
(If they grant you immunity , so they can't charge you even in the future, that's the only thing that gets you out of being able to plead the fifth).
> North Takes Fifth Amendment in Testimony to Senate Panel : Claimed Protection at Least 40 Times, One Source Says
> WASHINGTON — Congressional sources said today that fired National Security Council aide Lt. Col. Oliver L. North took the Fifth Amendment during his testimony Monday before the Senate Intelligence Committee.
> One source, who, like the others demanded anonymity, said North took the Fifth Amendment at least 40 times. Another source said he declined to answer a number of questions put to him by senators and committee staff members.
> Asked about an apparent contradiction between Sen. Dave Durenberger’s contention that witnesses had been candid and the report that North refused to answer many questions, committee spokesman Dave Holliday said he would make no attempt to clear it up.
---
NORTH SAID TO USE FIFTH AMENDMENT - https://www.nytimes.com/1986/12/02/world/north-said-to-use-f...
> ...
> The Fifth Amendment protects an individual in any proceeding from being required to give testimony that he feels may incriminate him. Invoking it carries no implication of guilt.
> Senator David Durenberger, Republican of Minnesota, who is chairman of the Select Committee on Intelligence, likened the proceedings before the panel to a grand jury investigation. He said witnesses were testifying under oath.
Actually more than the people who perpetrated the fraud, I hope the people who casually let it happen while doing none of their job to prevent it… I hope those people see real consequences.
There are always going to be cheats and bullshitters, our first line of defense against them are the people who are supposed to be reasonable just saying “no” to the dude sucking at League during a pitch.
https://www.cnbc.com/2022/12/12/us-doj-is-split-over-chargin...
But as a counterpoint, if they couldn't create AML controls for their exchange, they shouldn't have existed -- at least not until they built it.
[1] https://mishtalk.com/economics/binances-alleged-crypto-audit...
[2] https://arstechnica.com/tech-policy/2022/12/doj-divided-over...
(to elaborate: Look here, we have 2 billion in this account on Monday, 2 billion on that account on Tuesday and 2 billion over there on Wednesday, so that makes 6 billion total, right?).
I wonder how crypto exchanges can guarantee non-hypothecation of customer funds in a DeFi trustless manner. The methods I've heard about still are tradfi-style centralized mechanisms that can still be subverted, and do not leverage crypto currency's strengths, though I'd sure like to be pointed to any exchange that has really figured this aspect out.
People who are willing to be bribed generally tend to lack integrity and loyalty, so if you ever think that handing a corrupt person money is going to protect you once you turn from an asset into a liability with no leverage, stay out of that world. Which is probably what SBF thought too, which is why he was a really shoddy political operator and white collar fraudster with a very short lifespan.
It turns out not everything is a conspiracy.
"Prosecutors" also begins with the letter "P, but...
https://fortune.com/crypto/2022/11/29/sam-bankman-fried-poli...
https://www.washingtonpost.com/politics/2022/09/22/senate-re...
Even with all the corruption, sometimes the optics are a bridge too far, even for the connected.
I also don’t see why complete transparency would be the goal of the justice department. Sam might think of moving to Dubai if he knows all their moves.
The evidence of widespread corruption in the US government is everywhere if you open your eyes: legislators become vastly more wealthy after getting elected via insider trading, regulators invest in the very companies they oversee, prosecutors selectively prosecute crimes, sweetheart book deals and speaking gigs, positions on boards of think tanks and companies after their “public service” has ended, I could go on.
It’s not about transparency, it’s about integrity. All the things I mentioned above are open secrets. The US is a third world country with cell phones.
> The US is a third world country with cell phones.
This makes no sense.
No, it's not, and this sentiment is what frustrates a lot of us. I'm in no way saying "the world is fair" or that money and power can't be influential, but, at least in the US, and at least for the time being, there are a lot of career law enforcement people who really just want to do a good job.
Yes, these folks that do just want to do a good job have been under a heavy attack in the past 10-20 years as "the deep state", but most of them are just normal Joes and Janes that are good at their job and believe in following the law, and there are just not enough avenues at the time being to bypass that, particularly in high profile cases like this.
In the US our corruption is out in the open, we enshrine our corruption into laws. Corporations have lobby groups that literally write the legislation Congress passes. If you think our system has integrity you’re just naive I’m sorry.
Yes, corruption exists. Yes, there are bad actors. But this idea that "everything is corrupt, all the laws are corrupt, the whole system is corrupt" is just lazy bullshit.
And yet, OP’s point of view is a very common one among people. So why is that? I think dismissing this as “nihilism” it’s not a clever continuation of this conversation.
Is it because the system is very inefficient at healing itself (or so seems to be) from bad actors, that the public thinks it will never be healed? Is it because politics is a zero sum game, therefore since many are corrupt and cheating, all the others seem compelled to do the same in order to hang onto power? (Very similar dynamics happens with pro cyclist).
Is it because it attracts a certain profile of people that are more likely to be corrupted?
Given the power nature of politics and the relatively few players involved, is it because we are holding everybody at a high standard therefore even one episode of corruption is enough to taint the whole category, even when corruption is limited in scope?
Lots of places to go before slapping the “nihilist” label on the car.
And if indeed the system doesn’t get better, what’s a good way to address the “nihilist” point of view across the population?
Is the problem too big and too complex to be solved because we can’t change human nature? Then maybe it is nihilism after all.
Yes. Basically, all humans can be corrupted at an individual level with the right incentives, and all people are somewhat corrupt, let's say except Jesus. So the system we compose inherits the characteristics of its constituent parts and there is no way to design around that.
This seemingly cynical view is so common IMHO because it's true. As far as I can tell, those that don't see it are just young and haven't figured it out yet or haven't seen enough to realize it. We start out being taught Mr. Smith Goes to Washington for a couple decades of our lives and it takes some time to peel that back.
It doesn't make any sense, but the conspiracy people are experts at mental gymnastics.
It’s a conspiracy to think influence doesn’t peddle.
Nope. The investigation was opened months before FTX collapsed. It’s not like they’re going to announce it in advance!
https://www.bloomberg.com/news/articles/2022-11-21/us-prosec...
Figure out a way to make be accountable for the stuff they type online.
Three very rich crypto millionaires (or billionaires?) have died mysteriously in the past weeks. One, 30 years old, in his sleep. One in a helicopter which blew (not far from where I live) after a mysterious passenger cancelled his flight at the last minute. And another one who drowned (after having tweeted that "they" were after him).
If SBF has dirt on people, I think there's a very real possibility he got the message clear.
The probabilty that it's hubris, stupidity or privilege (all suggested in these comments) causing these interviews is less close to 1 than the probability it's a tactic to portray himself as a distracted lunatic with no notion of what happened under his watch.
Narcissism, there's a lot of that going around these days.
FTX had a lot of customers in Hong Kong. So where do you go?
Madoff got 150 years in prison, and i dont see any reason why SBF would get any less.
He lost the locals' money too [1]. They weren't letting him go anywhere.
[1] https://www.bloomberg.com/news/articles/2022-12-12/bahamas-p...
I actually see one: SBF mostly mishandled unregulated magic beans on an unregulated exchange (FTX.com).
The unregulated magic beans on the regulated exchange FTX.US are still there, waiting for withdrawal, according to his tweets.
US customers weren’t even allowed to register on FTX.com, which was outside the US.
Anyway, he still kinda defrauded Sequoia and friends, who didn’t buy magic beans but actual shares of the FTX exchanges (not sure about whether .com, .us or both)! But maybe he still gets less than 150 years..
Even if they only sent magic beans, wire fraud covers any form of property - not just money.
All North and South American countries do. All Caribbean countries too. Even Cuba.
Parts of Africa and Asia look pretty safe. Madagascar is nice this time of year.
0. https://2009-2017.state.gov/documents/organization/71600.pdf
People like Ghosan are safe because they flee to countries that won't extradite their own nationals as a matter of long standing policy. They have no problem extraditing troublemakers from other nations, especially under international pressure.
See Vietnam's latest extradition for example [1], which doesn't have an extradition treaty with the US and they aren't even on the best of terms. The only way they could get away in Madagascar is if the authorities there didn't have the resources to capture them - a small promise of USAID from the State department would be enough to put extradition on the table.
[1] https://hanoitimes.vn/vietnam-us-cooperate-to-extradite-amer...
If he had simple fraudulent intent (i.e. personal enrichment at the expense of customers), he would have had a plan. One that included adequate cash socked away in appropriate locations. Something much more well-thought out than "a US-friendly island 2 hrs by plane from SDNY".
People aren’t cartoon villains, and the speculation about “what I’d do if I were Al Capone” or whatever are just silly fantasy.
This is bank fraud, not a heist, also much different than Madoff.
This is the prepper fallacy: stockpiling riches but not allies makes you a target, not safe. Maybe you can get away with it if you’re an incredibly charismatic cult leader but most people are going to be much better off with friends and family than a pile of Krugerrands and guns.
You're going to ask to see a cartel boss and tell him you have $10B in untraceable money, and you need a small army - you're willing to pay 1,000 men - $100,000 for the next 10 years ? They will most probably start to torture you to know where the money is, before you finish these words.
That's a fun mental exercise btw - imagine you have $1B now - let's say illegal money you need to keep. How do you proceed ?
If you committed a billion in fraud, you probably wouldn't be shitposting on Twitter or giving interviews that made a prosecuter's case easier, either.
Guess what, you're smarter than this dude.
Then again, realistically a disappearing act of this magnitude would likely require access to a lot of trusted people to pull it off. Plastic surgery, boat captains, someone to plant false leads, security, etc.
Bahamas will have absolutely not let him get out of their sight. They have so much egg on their face.
I can even see the titles if he left "Did he bribed Bahamas officials to look the other way?" ...
There was talk that he was followed around everywhere in Bahamas by the police.
Like I said, there are ways to keep someone on an island without arresting them. Especially in this case, what was he going to do, sue?
On a boat? Usually not. Most people island hopping in the Caribbean definitely aren't going through any kind of passport controls.
Unless the cops were following him everywhere he went, Bahamas would be one of the easier places to escape.
He answered this question at the beginning of this interview:
https://www.youtube.com/watch?v=zGNiYt1GN_4
"from my perspective, it's not about looking to go home.... this is were I've been running FTX from.... there are still things that need to get done."
1.No accounting department or compliance staffs at both FTX and Alameda 2.$6billion spent and yet FTX and Alameda combined never made over $2billion in total revenue.
Someone obviously become an informant, probably CE given her 2018 comment about wire fraud.
Just think about this, all the influencers that got paid have to now give that $1billion back as it was proceeds of fraud conveyed. So those who lost money will get 1/8th of their money back eventually.
https://www.wsj.com/articles/sam-bankman-frieds-parents-were...
"Joseph Bankman and Barbara Fried remained by Mr. Bankman-Fried’s side—as legal advisers, one person familiar with the matter said, but mainly as parents to a son who is in deep trouble.
Before FTX’s collapse, Mr. Bankman was a paid employee of the company for almost a year. He joined his son in meetings with Washington policy makers, expanded its philanthropic endeavors and helped connect his son to at least one major investor. And when Mr. Bankman and Ms. Fried visited their son in the Bahamas, where FTX is based, the company provided a place for them to stay."
The AG must be confident that they have enough to win a case. That was quick.
[1] https://docs.house.gov/meetings/BA/BA00/20221213/115246/HHRG...
> FTX US was not operated independently of FTX.com.
None of that was under auth.
"the prosecutor: but you said this on Twitter?"
"SBF: I was no longer the CEO of FTX and I was just kidding".
> "SBF: I was no longer the CEO of FTX and I was just kidding".
Jury: "We don't buy it. Guilty"
Though I do wish he had testified and further incremented himself.
SBF += 1;I knew this was Unixware’s fault.
https://www.cnbc.com/2022/12/12/former-ftx-ceo-sam-bankman-f...
"Mamaaa, life had just begun, But now I've gone and thrown it all away"
Looking forward to the perp walk and orange jumper.
Or even more likely: the committee had no idea what the executive was doing.
In the testimony, a draft copy of which was seen by Reuters, Bankman-Fried planned to say he was pressured by Sullivan and Cromwell lawyers to nominate Ray as CEO following the sudden exodus of customer funds. And when within minutes he changed his mind, following an offer of billions of dollars of fresh funding, he was told it was too late.
It is unclear, however, whether Bankman-Fried will get to testify."
https://www.cbc.ca/news/business/ftx-bankman-fried-arrested-...
https://www.forbes.com/sites/stevenehrlich/2022/12/13/exclus...
To read the transcript as a PDF:
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firefox ./1.pdfHe claims he cares about the people of the Bahamas. The fact that his father is a tax law professor and the country where they located is a tax haven is pure coincidence, of course. When he was handing out donations in his fake "effective altruism" campaign to ensure he and other crypto crooks could keep breaking the law for profit without being seriously regulated, he may have forgotten about all the people in Bahamaian prisons who also believe they need to break the law for profit. This is a great chance to bond with them during the holiday season.
The quality of the prison conditions should be commensurate with the amount of taxes paid to the Crown. It is a nice lesson in "utilitarianism".
The FTX saga has been going on for a few weeks now. Keep that popcorn away and wait.
My gut feeling is that SBF won't rat-out any corruption that goes way up to the stratosphere of US politics, and instead will try to go for a deal, perhaps even help with investigations into Binance etc., however my concern is another time where we don't get true justice (the facts become public knowledge, fair trial, etc.).
Next few weeks and months are going to be interesting, I think.
EDIT: Some downvotes, so just wanted to elaborate: Nowhere did I say that the alleged criminal acts of SBF of JE are "comparable". To say that is an extremely gross and unfathomable misunderstanding of what I was saying.
I am comparing their involvement with politics and political figures (unequivocally), and noting how both have either alleged or proven to have been involved in illegal activity. I feel like it's a pretty important and note-worthy point to make, but YMMV.
However, I understand that my wording could have made that more clear for everyone. I apologise for that. Sorry.
> was an American fraudster and financier who ran the largest Ponzi scheme in history, worth about $64.8 billion.
thats dark.
Magnate of coins
Hooverer of phet
Legend of League
Pinner of weasels
What
Why? Why was SBF naive versus knowing and not caring? He is an intelligent man.
In fact, it seems that he completely did understand the importance of things like separating customer funds between businesses given that FTX claimed to have rigorous procedures around this prior to their collapse. From the outside, it appears that he is trying to save his skin by pleading ignorance.
Smart-ish move, tbh.
Blockchains mathematically prevent fraudulent misuse of deposits
Yes, on/off ramps are an issue.
Yes, blockchains do not prevent physical threats of violence or profound custodial negligence.
No, SBF would not have been able to defraud millions of depositors on a blockchain where everyone self-custodied.
Blockchains never had a chance. It was designed to be a ponzi from the start. If you took it as something more than that then the joke is on you.
Blockchains mathematically prevent fraudulent misuse of deposits
https://news.ycombinator.com/newsguidelines.html
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
> SBF would not have been able to defraud millions of depositors on a blockchain where everyone self-custodied.
Does the TerraUSD count? People self-custodied, but the blockchain was built in such a way that it went to 0 easily enough.
Was that profound custodial negligence? It seems like blockchains that fail in such a way are a dime a dozen, and the end result doesn't seem vastly different from "$company running $TKN has gained a lot of money, and all the holders self-custodying $TKN have lost practically all their money even though $company assured them $TKN was safe". Is that any different in a useful way from "FTX has gained a lot of money, and all its customers have lost practically all their money which the company assured them was safe"?
Practically every crypto "pump and dump" follows this scheme of a custom token ('blockchain' if you will), a company saying it's not a pump and dump, and users self-custodying right until they lose all their money.
Perhaps blockchains prevent "fraudulent misuse of deposits", but enable "users exchange money for $TKN, which is definitely 100% worth something, and then it isn't", which really seems quite similar to me.
Sure, it blew up. We should totally criticize Terra for that.
But it succeeded in preventing Do Kwon and everyone else in the entire world from fraudulently misusing deposits.
You wrote valid criticism of blockchains, but you failed to state how SBF could have done what he did on a blockchain where everyone self-custodied.
GP also failed to state how blockchains prevent forest fires, herpes, war, racism or hiccups. There are an infinite number of things that have nothing to do with what factually happened around the FTX collapse.
I'm not claiming anyone should hold all their net worth on a blockchain.
But blockchains do have extremely desirable properties in preventing fraud _on the chain_.
I would love to have mathematical proof that my government is not fraudulently misusing my tax dollars, at least at some level. Who wouldn't?
I would love to hold some portion of my assets in a way that no one, even the government, can seize it or freeze it. What if my government is Cyprus in 2013? What if my government is the 1940s Nazi government? I want to be able to flee the country without losing my livelihood to tyranny and abuse.
Good luck getting your assets out of the legacy financial system. It's much harder than memorizing a seed phrase or transporting minuscule hardware.
If you're referring to Andrew Ross Sorkin's interview of SBF, you're misreading the larger editorial framing of that interview.
The editorial intent was to get SBF talking and present, in public, evidence of whatever he did or did not do. The motivation of that interview was not to provide a platform for his exculpation.
Consider, for example, Fortune's analysis of that interview, which begins [0]
> Where to begin? In a decade of covering crypto, I’ve seen a lot of
> strange spectacles but nothing quite like Sam Bankman-Fried’s interview
> at the New York Times DealBook Summit—a 45-minute display of delusion
> and sociopathy in which the disgraced FTX founder whined, wheedled, and
> did everything but acknowledge his responsibility for the financial
> crime of the year.
Stop being a NYT apologist.
Sorkin threw softballs at SBF again and again, accepted answers given without an iota of concern about the bold lies spewed back, profusely thanked SBF for being so generous with his time over and over again as if it's the NYT that somehow stole billions and tried to lie and get away with it.
Yes, DEXs exist. Yes, you can self-custody on DEXs.
For crypto yes you can have a hard wallet, but it can still be stolen from you without anyone physically touching your hard wallet.
I don’t and won’t see the appeal for crypto until it has a killer app that people NEED to use for another reason than “I can get rich quick”
How?
I just want to stop the ignorant, misinformed takes.
It's so paradoxical that HN is paranoid about the government changing settings on your phone without your permission, and yet HN does not think we should prevent the government or an opaque set of third parties from arbitrarily seizing and freezing your money.
All the depositors have the extremely pressing NEED of not having all their deposits stolen from them.
Blockchains mathematically prevent fraudulent misuse of deposits.
People aren't mad about SBF taking a wrench to their head. They're mad about SBF defrauding them.
Could not have happened on a blockchain.
Depending on the argument I hear that the ledger is anonymous or not anonymous.
Anonymity has nothing to do with the property that you cannot steal on the blockchain.
How do you think blockchains even work? Read primary sources before vaguely disagreeing.
If I’ve mistaken your argument then please correct me. I’m familiar with blockchain and have contributed to multiple projects in the open source community back when I saw potential and promise in blockchain tech.
If you're the only person with the private key, you're the only person who can move the funds.
It's math. Unless you have a mathematical argument as to how to move funds without the private key, you're ignorant and uninformed.
Again, read primary sources and learn fundamental concepts before vaguely disagreeing.
It's also correct that FTT tokens are worthless.
An argument against the worth of an arbitrary token created on a permissionless blockchain is not an argument against the good, useful, valuable properties of blockchains, such as the fact that you mathematically cannot be stolen from without physical coercion or profound negligence.
Exhibit A: https://rekt.news/madmeerkat-finance-rekt/
Exhibit B: https://rekt.news/monox-rekt/
Exhibit C: https://www.coindesk.com/tech/2022/11/02/cross-chain-dex-rub...
Or do you want me to find a few more examples before you stop spreading misinformation?
Why prevent people from using math to prove their assets cannot he stolen?
Banks are extremely valuable to me and probably always will be.
Blockchains have certain properties which make them extremely desirable in a specific set of use-cases. That set was greatly exaggerated by ignorance and insanity in the bull market. Still, the true set is nonzero.
Stop being an ideologue. It spreads ignorance.
Yes, I strongly recommend everyone do the same.
If it's a "yield vault" or an "LP pool" then you really truly should read every line of code and understand all the risks, because it is extremely likely that there is some catastrophic exploit, given the current near non-existent scaffolding regarding formal verification of smart contracts.
1. People only deposit their crypto on LP pools they can read and verify, on chains whose code they can read and verify. Since people with such technical know-how is very limited, there is not much liquidity in the "liquidity pools" and thus the DEXes are virtually unusable.
2. People deposit their money to DEXes without reading and verifying every single smart contracts and Blockchain code. DEXes have sufficient liquidity but the depositors sometimes wake up with all their money gone in the air.
If you are arriving at a third possibility, naturally you are making a different assumption than I made in the above two points. What are the assumptions that leads you there? I would really like to understand.
It could be that there is no good answer and blockchains are simply hard to use and we should advise the general public to exercise extreme caution when using them, if at all.
Turns out it was nothing more than a series of scams, and the ensuing court cases will prove this beyond a shadow of a doubt. This entire edifice will come crumbling down, and take this entire sordid industry with it. One can hope.
I hear your anger, but consider that this is the one financial system where self-custody is an an actual workable option. You can't store 100M USD under a mattress. You can't deploy large amounts of cash without permission from governments. In the US, banks have to report transactions over $600 to the IRS.
That said, use Monero. It's the only one of these things that protects privacy.
Depositors were stolen from because they did not self-custody.
You can't take someone else' funds on a blockchain, except by physical threat or profound custodial negligence.
Yes, DEXs exist.
On/off-ramps are a huge topic and we have a lot of work to do to make these ramps as permissionless as possible, should we want to allow humans to decide for themselves whether or not to comply with (potentially) tyrannical governments.
So why you're correct in principle, it would be of no relevance if everyone self-custodied (also let's not ignore the bugs crypto contracts)
People have successfully avoided fraud, theft, and the tyrannical seizure of their assets by arbitrary decisions of arbitrary government officials.
Billions of dollars worth of assets are stored on blockchains.
Unless you have a mathematical argument against the properties of a blockchain, I will continue to believe the properties are true."
https://www.foxbusiness.com/markets/sec-chairman-gary-gensle...
https://www.dailymail.co.uk/news/article-11438875/Questions-...
https://moguldom.com/427483/is-sec-chair-gary-gensler-compro...