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 ???.
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.
[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?