The United States of America vs. Samuel Bankman-Fried Indictment [pdf] | Hacker News Reader

The United States of America vs. Samuel Bankman-Fried Indictment [pdf]

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652 pointsdereg691 comments

Can we discus recovery? The Madoff trustee was able to recover something like 90% of the Madoff Ponzi. Alameda and FTX's real estate purchases have value, as do their VC investments, purchases of bank stock, etc. In other words, it's not all gone. My understanding is that even some of the political contributions can be clawed back.

FTX's purchases of IOU's (i.e., crypto) that declined in value are not likely to be recoverable. But Bitcoin still has substantial value. There's at least a billion in loans to insiders that can be clawed back.

How much really was lost?

I’d be absolutely shocked if more than 25% can be recovered. They spent multi-billions on venture investments that were not just high-risk due to their early stage nature but also inextricably linked to ftx by way of the cryptocurrency market as a whole and thus about as undiversified as humanly possible. There’s a few of their investments that have value and value could be recovered through sales but almost all of them are illiquid and have seen valuations collapse.

Also consider that a lot of the players involved are overseas and anonymous* which makes it much more difficult to clawback relative to people onshore (like in the case of madoff).

If we limit ourselves to depositor funds -- who morally ought to be superior creditors to investors-- I wouldn't be shocked if the recovery percentage was quite a bit larger than that.

One thing that made 90% recoveries of Madoff possible were that they first backed out all the fake gains that the customers thought they had but never actually had. This will be harder to do with FTX, but I expect that once all the bogus margin trading on fake assets is backed out we'll find that the losses were far less substantial than the numbers being thrown around.

I think that might have been true a year ago but at the time of FTX’s collapse, most market participants were underwater, especially the laypeople. The amount of money in the crypto market is definitely not anywhere near the supposed market cap, but if we look at USDC’s 50bn we can say with reasonable confidence that there’s at least 50bn of USD in the crypto market. If FTX was 10% of the market then 5 billion seems very plausible as a lower bound for the amount of real money value on the exchange (before backing out paper gains). That’s 5bn after people have lost >50% in the last year.

There was something like 6bn withdrawn in the days before the collapse and if clawbacks could get most of it, we would at least see 0.40 on the dollar recovered… but I am very very skeptical about that happening, given FTX international was for people outside of US jurisdiction — not impossible to recover but much more difficult.

I hope you’re right that it turns out that there’s only, say, 2bn of real money missing, and most people can be made mostly whole… but given the bloodbath of the last year, I fear that there’s probably more real money gone now, rather than less. A lot of people would be absolutely gleeful if you could somehow rollback the last year of trades on FTX.

My wild ass guesstimate before learning about the mobilecoin (the signal integrated crypto) apparent fraud would have been 1-2 billion lost, so I guess I should update that to 3 billion lost-- though there is probably reasonable odds on recovering the mobilecoin funds since there were probably only a few people who could have had access to enough mobilecoin to hit a billion worth even at $67/coin.

It's quite possible that I'm just being bubbled/hopeful. I don't personally know anyone who lost money in FTX even though I know a lot of cryptocurrency people and I thought it was obviously sketchy from when I first heard of it, so these are probably influencing my perspective on how big it actually was.

> If FTX was 10% of the market

I'm dubious about 10%. We know in hindsight that FTX was faking their size in multiple respects (including e.g. faking their valuation by MTMing illiquid coins that they created and never circulated) -- probably every claim we've seen about their size based on their own figures was just lies.

People have already looked into this, and the claims on FTX' debt were valued at 5c on the dollar. Alameda has burned through billions, and most of what was left were illiquid shitcoins and other worthless junk. Madoff, at least, was dealing with real assets.

> burned through billions

If Alameda lost the billions, then who won the billions? Who was on the other side of those trades?

I'd be surprised if you could claw back actual trades on an open arms-length market assuming that's what the FTX exchange was. In Madoff's case, there were no trades at all. Madoff collected the money from his investors, generated fake statements showing inflated fake balances and profitable trades (that never actually occurred) and then selectively doled out limited cash redemptions until everyone demanded their money back at once and the whole thing came crashing down. In SBF's case, it looks like SBF took money from his customers, and then bought or sold crypto in arms-length transactions on an open exchange. If that's the case it's hard to see how they can get the money back from the other side of the trades where his counterparties were buying or selling on the market in good faith. I think the only hope is that if they can somehow get the assets from his affiliated entities and/or reclaim assets that SBF and/or his companies still have control over whether on the block chain or elsewhere.

Matt Levine has speculated that a bunch of the money was lost via market-making with insufficient controls (margin enforcement etc.). For example, as reported by the Financial Times (via Levine's Dec. 5 newsletter, "Crypto had a Credit Bubble"):

[begin quote]

In April 2021, a crypto token called MobileCoin — used for payments in the privacy-focused messaging app Signal — suddenly spiked in price from about $6 to almost $70, before crashing back down again almost as quickly.

The wild moves came after a trader on FTX had built an unusually large position in the little-known token. Two people familiar with the matter said that when the price rose, the trader used the position to borrow against it on FTX, potentially a scheme to extract dollars from the exchange.

Alameda was forced to step in and assume the trader’s position to protect FTX. The trading company’s loss on this deal was at least in the hundreds of millions of dollars, the people said, and as high as $1bn, according to one of the people, wiping out a large share of Alameda’s 2021 trading profits.

[end quote]

...So whomever was on the other side of positions like that. Savvy outsider or well-informed insider? Who knows! Maybe it can be reclaimed, or maybe it's long dispersed down a chain of dozens of crypto exchanges, tumblers, offshore fiat accounts, and so forth. I expect we'll learn a lot more over the next few weeks as the federal case ramps up and the bankruptcy executor delivers more findings.

Seeing this:

> The wild moves came after a trader on FTX had built an unusually large position in the little-known token. Two people familiar with the matter said that when the price rose, the trader used the position to borrow against it on FTX, potentially a scheme to extract dollars from the exchange.

Makes calling regular currency "fiat" super ironic:

> offshore fiat accounts

It looks like at the end of the day, cryptocurrency is something people "fiat" out of thin air, "fair" algorithms and computers and systems be damned.

The crypto market? You can’t just unwind the markets by a few months to fix things

> Who was on the other side of those trades?

Unrelated funds, and random morons from crypto's equivalent of r/wallstreetbets.

It's very easy to lose a lot of money, really quickly in the markets.

Ever wondered where the money to make crypto go up was coming from?

I’m surprised bitcoin is holding up as well as it is

I don't pretend to fully understand markets but movement on BTC, etc with all of these developments is just further proof to me there is no connection between any of these coins and reality.

As another example, when Ethereum successfully moved to proof of stake without a hitch (an ultimately impressive and challenging development) the price actually went down.

I don't understand anything in this space.

Lots of events are already "priced in" before they happen. That is, investors have anticipated the upcoming event (eg Ethereum upgrade) and the stock/token price has already moved accordingly.

https://obliviousinvestor.com/what-does-it-mean-for-somethin...

Even with that how does this[0] chart make any sense?

[0] - https://www.coindesk.com/embedded-chart/tcPpzTgN6bBC9

It's not clear to me that the collapse of corrupt crypto exchanges should make the price of bitcoin drop.

What is the mechanism exactly? It's not like FTX holds a shitload of bitcoin and now suddenly they have to sell it all, driving down the price.

Is the mechanism just some kind of psychological thing, where a centralized criminal enterprise is associated with "crypto", even though it was mostly esoteric shit like FTT and MobileCoin and not bitcoin, but since bitcoin is also "crypto" then people who hold it would sell it because FTX folded?

It's like saying the collapse of Bear Stearns and Lehman Brothers should somehow make US dollars worth less.

1) I would expect a fairly large portion of people are selling their cryptocurrencies on exchanges and wiring out in fiat instead of undertaking the relatively technically challenging process of moving them on chain to somewhere/something else. While we can see on chain activity acknowledged numbers citing "withdrawals" from exchanges don't provide specifics. I personally know several people who have just said "Yeah turns out the entire thing is a scam, I don't trust anything and I'll just cut my losses and be done with it all".

2) Bear Stearns and Lehman Brothers were not a total loss that resulted in the founder being arrested and charged with multiple counts of fraud within weeks with multiple reports from the guy who handled the failure of Enron (John J Ray) expressing public incredulity on just how crazy the whole thing was. Failed crypto institutions aren't receiving TARP loans or being absorbed by other institutions. I'm not saying what caused the 2008 financial crisis wasn't criminal but as we all know no one went to jail over it, which if nothing else highlights the differences in terms of public opinion and treatment by regulators.

3) Any comparison between crypto (individual coin or the entire ecosystem) and the world's reserve currency backed by the world's largest economy is dubious at best. The complete collapse of a couple of even the largest banks barely puts a dent in USD in terms of circulating supply, activity, etc. USD has this status because it's backed by what is considered to be the most financially stable institution in the world - the United States. In the minds of many if crypto is "backed" by anything it's people like SBF, the VCs this kid was able to hoodwink, etc.

4) The collapse of FTX has had an incredible ripple effect that has caused at least a dozen other entities (that I've tracked) within crypto to fail.

5) Over the past few weeks there has been increased focus and media attention on the shadiness of Binance, Tether, and virtually every other crypto exchange/institution up to and including Coinbase.

This is all reflected in a survey from a couple of weeks ago that indicates just 8% of Americans have a positive view of cryptocurrencies[0]. I'm sure if they ran that survey again now that number would be even lower.

So yeah, I would expect crypto prices to move downward significantly.

[0] - https://www.cnbc.com/2022/12/07/just-8percent-of-americans-h...

Okay, then to summarize, you're saying there's lots of shady stuff with centralized exchanges, and more of them could go bankrupt, and people with fiat and shitcoins and bitcoin on deposit there could lose it.

There's a run on the bank, people want out, and the easiest way to get out is to sell your shitcoins and your bitcoin, and wire transfer dollars to your bank account.

With all the selling of bitcoin to raise cash, the price of bitcoin must drop.

And yet the bitcoin price is up six percent in the last seven days, so there must be some other mechanism at work.

More or less - exactly but like I said in my original post, almost nothing in this space makes sense to me. I'm trying to decide if there's something I'm missing (happens a lot) or like Theranos, mortgages and real estate in 2006, WeWork, etc (which I always knew were off) it's all being propped up by who/what knows what and it's just a matter of time before it crashes and burns.

I moved to Florida in 2006 and have distinct memories of meeting sleazy and disgusting mortgage brokers from Countrywide, real estate agents, etc flaunting their fast cash while thinking all along "this doesn't seem right". I basically watched "The Big Short" in realtime... Same goes for Theranos (it's been 10 years, where is your product?) and WeWork (wait aren't you just leasing out office space?).

Crypto is 14 years in and absent a few extremely rare use cases like fleeing a dictatorship, dealing with currency destabilization in developing nations, etc no one uses it for anything other than trading on exchanges, which at this point seems like Russian roulette.

It's as though the last remaining "widespread" use case for crypto has now almost been effectively wiped out.

The collapse of Bear Stearns and Lehman Brothers did make US dollars worth less, quite rightly.

One blogger's estimate of their losses:

>Voyager/BlockFi acquisition: 1.5b

>LUNA exposure: 1b

>KCG-style algo crash: 1b

>FTT/SRM collateral maintenance: 2b

>Venture capital: 2b

>Real estate, branding, other frivolous spending: 2b

>FTT drop from $22 to $4: 4b

>Discretionary longs going bad: 2b

>Total: 15.5 billion

https://milkyeggs.com/?p=175

Reminds me of the famous quote by the footballer George Best “I spent a lot of money on booze, birds and fast cars. The rest I just squandered.”

A lot of it is probably stolen. A lot went into thousands of worthless altcoins and their devs got rich. Another big portion is probably advertising. They spent big on YouTube influencers. Basically a lot of people got rich and a lot more people got screwed.

Altcoin devs are not paid well; Bitcoin devs make entirely normal SWE salaries according to public information, and I can't imagine DogeCoin or whatever is any better. All the big money is in marketing, since that's what creates the value.

By devs he probably doesn't mean software devs, but coin creators.

There was never "billions" of deposits in the first place. Someone mints a coin and pays FTX 5 million to list it. Then that person pays influencers and invests themselves to get the price of the coin to go up. Now on paper that coin is worth "100 million". But in reality only 8 million dollars has been spent.

This is often very ignored in analysis, most (if not all) those coins have prizes based on inflated valuations.

I'd imagine there's a huge problem in that FTX did not declare bankruptcy until the vast majority of their liquid assets had been removed by the bank run. If they had declared bankruptcy before the run, most people might have gotten out with a 50% haircut.

Instead, after the run, those left over will get nothing and those who got out will got 100%.

Those who got out will be told they need to give back 50% (assuming you are right that that is how much was left).

Even non-US customers? How?

The US has an excellent record of recovering stolen money from most places you would want to live (and reciprocally of helping other countries)

Maybe I wouldn’t, but at least a billion people live somewhere happily out of US extra-jurisdiction.

Do you have a list with those places? Google isn't helping much.

I assume they're referring to the over a billion people living in China. Whether China is a place you'd want to live depends entirely on your personal cirumstances, of course.

How?

Bankruptcy law allows for the clawback of preferential transfers. Any transfers within 90 days of bankruptcy are assumed to be preferential. Or transfers for a longer time to insiders. And that's without fraud. With fraud they can go back farther. Like, Madoff's investors who got out in time had to turn over a lot of cash.

But this is nothing like the Madoff situation. So you're saying if I withdraw my rightful funds 80 days before a company goes bankrupt, and I use those funds to pay for consumable goods, and consume those goods, that those funds can be clawed back and I am now in debt? That doesn't sound right at all.

I also just looked and a preferential transfer would be when the company that goes bankrupt deliberately pays off some debs but not others, hence giving some creditors preference. The notion does not seem to extend to individuals otherwise regularly conducting business with the company. That can't be resolved the way you suggested. Customers who ran FTX will not be required to return their funds so that someone can distribute some of their money to FTX's creditors, or even so that things can be "fairly" distributed across all customers...

Not only can it happen like that, it can happen like that even if there is no fraud. Paying off some customers you owe money to would be giving those creditors preference, I don't see how else you could interpret it.

Heck, FTX went out of its way to only allow Bahamian citizens to withdraw money at the end, imagining that would be the jury pool deciding their fate soon.

I don't believe it would even be possible to "claw back" consumed goods, is my point. If you can link to some examples of ordinary people getting money clawed back because they withdrew it form a financial institution prior to bankruptcy, please do, because I simply don't understand how that's possible. The money is gone.

The guy in charge of this for FTX is the same guy in charge of handling getting money back from the Enron collapse. He's currently testifying to congress about the state of things. It doesn't look good.

Well the Madoff trustee's were able to see who received payouts from Madoff due to KYC rules. This allowed the trustee to go to people, most of whom were completely innocent, to ask the to give back some of the money they redeemed from Madoff.

FTX on the other hand has very few KYC docs so the trustees are left with wallet addresses.

Not sure how you contact a wallet address to ask for money back.

There was also a lot of paper wealth. You can get back your FTT tokens but they’re completely worthless

This is a distraction.

Billions of dollars and euros went into a black box.

Then some magic beans invented out of thin air came out of the black box.

Now when we open the black box, the billions of dollars and euros are gone.

FTT tokens doesn't explain where the fiat went.

Yes the real dollars went somewhere. I would guess the majority of them were lost from poor trades by Alameda. Combine that with the fact that a lot of those real dollars were converted in to Crypto schemes which are now down 90%. And their insane spend on houses and politics and who knows what else. I’m waiting anxiously to see what the truth is once we get some real data

madoff operated from 01960 to 02008

kyc is from 02002

His Ponzi scheme started in 1991. Ponzi schemes are exponential, so more than 90% of the volume was after 2002. What's with the leading zeros?

Probably preparing for the year 9999 issue early.

Most systems don't have a Y10k issue: year numbers are variable-width already. Forcing a fixed-width 5-digit representation is creating a Y100k issue.

Never made sense how any software would consider the year value as _two characters_ when an integer works far better. There's even a 0 epoch date for crying out loud.

I was under the impression it was a quirk in cobol.

I think this is a generational divide when computers were significantly more limited. If you look at older data formats, they are nearly all fixed width. Either due to punch cards, memory constraints, performance considerations, or just band wagoning, prematurely optimizing for date representation seems silly.

Early mainframes read data on punch cards or tape files which were character-based (or possibly, binary-coded decimal). Two digits were used for the year to save memory.

Because when the Y2K problem was created, computers had only recently been invented, every byte counted, and there was no history of software best practices.

Even by 1980, which was 5 years before any recorded mention of the Y2K problem, an IBM mainframe, of the kind a university might have, had only e.g. 4 MB of main memory, which had to support many concurrent users.

Such computers would have been unable to load even a single typical binary produced by a modern language like Go or Rust into its memory - yet they supported dozens of concurrent users and processes, doing everything from running accounting batch jobs, compiling and running programs in Assembler, COBOL, FORTRAN, PL/I, or APL, and running interactive sessions in languages like LISP or BASIC. Part of how they achieved all that was not wasting any bytes they didn’t absolutely have to.

Possibly, the origins of the practice predates computers entirely, and goes back to their predecessors in business data processing, unit record equipment. As such, it may be like many other traditions - made complete sense when it was invented, yet people still clung to it long after it ceased to do so.

Unit record equipment generally didn’t use binary integers, instead using BCD; and most early business-oriented computers followed their example. Binary integers were mainly found on scientific machines (along with floating point), until the mid-1960s, when the hard division between business computing and scientific computing faded away, and general purpose architectures, equally capable of commerce and science, began to flourish.

His Ponzi provably started in 1991. It may have been going on for longer than that.

the leading zeros are a sign that the poster is unusually short-sighted and only concerned about the next 98,000 years or so in their fixed-size date representations.

before i get tarred and feathered, i'm just going for a cheap ironic laugh here, no offense intended! :) more seriously, i sorta doubt humanity is going to be around long enough to care, and if we are, the odds of some apocalypse resetting our calendars aren't zero.

During my first week in my first programming job I remember overhearing a senior engineer saying “don’t worry, there’s not another leap year for 2 years”. I was still working there on February 29, he wasn’t. It was a stressful day. My condolences go out to the engineers who will be working on January 1st 100000.

Surely by then we'll have had a powerful enough pope to rename the months at least once.

SEPTember = 7

OCTOber = 8

NOVember = 9

DECember = 10

Fixed it!

And do we need the name "JASON" (July to November) first letters? Seems unnecessary.

Easier to make the year begin in March.

Not sure renaming the months is gonna help with the numbering of the years...

My hope is that some programmer dictator will instate a form of the discordian calender:

- All 5 seasons are the same length - The days of the year always fall on the same week day, as the week is 5 days long - the year always starts with the first day of the week. - the leap day is not assigned a day

Things I would change though: - start the year at winter solstice. - put the leap day at the end of the year.

https://en.m.wikipedia.org/wiki/Discordian_calendar

Finally, we can get rid of Wednesday... Wendsday? Woesnday?.... that day in the middle of the week that no one can spell =P

February needs to be reconsidered as well imo.

In German Wednesday got that treatment in the middle age and was replaced by what would be midweek in English.

You can rename the months any time you feel like. The problem is getting other people to go along with your renaming.

Once upon a time, enough people cared what the Pope had to say, he could actually succeed in changing the calendar for everybody. But, it would be a rather interesting future history for the Catholic Church to regain power to the point that became true once again.

I wonder how bad 2038 will be. Real talk, I expect a lot of servers to go down.

I understand Madoff's scheme started in 1960's/1970's. The feeders to the fund date way back. The SEC enforcement action in the early 90's wasn't directly related to the ponzi scheme, more aimed at the feeders. The wiki pedia article has this "Federal investigators believe the fraud in the investment management division and advisory division may have begun in the 1970s.[27][failed verification] However, Madoff himself stated his fraudulent activities began in the 1990s.[28] ". I would trust the Feds. https://en.wikipedia.org/wiki/Madoff_investment_scandal

I've learned to identify a kragen post from the preceding zero.

Even if it started before KYC was a law, it's not too hard to imagine that Madoff had better records than FTX which by all accounts was a s$&tshow

You are right about the year KYC came into effect, so good job!!

But that makes my point. As of 2002 Madoff had to have clear records of f who he redeemed money to.

When the bankruptcy trustee went after people who redeemed they only went back a few years and were able to use those KYC docs they had since 2002 to get the money back.

> FTX on the other hand has very few KYC docs so the trustees are left with wallet addresses.

FTX (US? International? Both?) required KYC during sign-up. Or what do you mean?

I was referring to FTX, not FTX.US

FTX had KYC as does any exchange with bank accounts. But that doesn’t prevent people from paying nominees for register accounts for them either.

Wouldn't FTX-US be required to KYC all of their customers? I assumed that was the (part of) the reason why these exchanges had us and non us versions.

(edit links) https://help.ftx.com/hc/en-us/articles/360027668192-Individu...

https://help.ftx.us/hc/en-us/articles/360048666713-Account-T...

> FTX's purchases of IOU's (i.e., crypto)

Crypto is mostly not IOUs since it doesn’t tie to an obligation by anyone to do anything. (Explicitly redeemable tokens are IOUs, though.)

The problem is opportunity cost. People invested in Madoff to grow their money. So if I invest $100 in Madoff and ten years later they say “we recovered $90, congrats,” yeah that’s better than nothing. But if I had put that into a legitimate investment, maybe I’d have $180.

Other folks got money out of Madoff during his scam years, and the trustee says “I’m taking that money back to pay back others.”

So much of crypto went to things that now have little economic value. Burnt out computer hardware, enormous electricity, Tom Brady’s endorsement deal. At least with the housing bubble we got some buildings (I live in a bubble neighborhood.) Crypto is like lighting money on fire. The sooner this scam is over, the better.

Shkreli got hard time even though investors didn't lose money due to his fraud.

There isn't a performance threshold beyond which fraud ceases to be criminal.

Was that trial a bit politicized yu think? serious question

Not particularly. He had gained notoriety due to other behavior (raising drug prices to fund other drug research, his attitude during his Congressional testimony and media appearances, etc.), but it sounds like his fraud [or whatever he was specifically found guilty of] was very cut-and-dry against SEC and other relevant rules.

"On December 17, 2015, Shkreli was arrested by the FBI after a federal indictment in the U.S. District Court for the Eastern District of New York was filed, charging him with securities fraud. The charges were filed after an investigation into his tenure at MSMB Capital Management and Retrophin. U.S. Attorney Robert Capers said, "Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company."

I think that is a misleading quote. He made actual profits, albeit by unscrupulous (but legal and very common) methods. There was nothing like a ponzi scheme, the prosecution just wanted to say a crime that was well known at the time. Along the way he made false statements to investors, and he was so gross and unpopular they were able to get a conviction the "victims" were not even interested in, but only on two securities technicalities and only because the jury wanted to get him on something. He was acquitted of 5 other more serious charges.

This is a great example of a public show trial, where they basically make an example of someone while allowing companies to engage in the same disgusting behavior without any attempt to discourage it.

Justice Department press releases are incredibly biased. His hedge fund failed (legal), he lied to his investors and said everything was fine (this is the fraud part), then he started a drug company called Retrophin (now NASDAQ: TVTX) which ended up being worth a billion dollars and he was able to repay investors in shares of Retrophin or proceeds from selling shares in Retrophin.

He certainly committed fraud, but it’s certainly unusual that he was prosecuted for it when nobody lost money. In fact, investors did well.

It’s hard not to feel like this is not a thing that would have been investigated had he not been a totally raging asshole.

It’s not true that nobody lost money in spite of the fact that he made this claim in court and it is repeated frequently. The court found he reduced the gains from group A to pay off losses from group B. People in group A lost money that was rightfully theirs as a result of his actions.

Shkreli is a good example of how well oiled justice runs if the defendant is politically indefensible. In the same vein the treatment that SBF got so far (eg getting invited as speaker on a NYT event that featured people such as Selenskyy) makes me fear it will be a much softer prosecution.

A couple of days ago there was a consensus group of Republican commentators confidently asserting SBF’s Democratic donations and connections meant there would no investigation/prosecution at all. Perhaps now this have pivoted to saying they’ll go easy on him?

It seems to me, all these assertions say nothing about the process of justice for SBF, and instead only illustrate that the people making them can’t conceive that there is a section of the political class who believe the law should apply equally to rich people as well as poor people.

Didn't he and his close associates donate to the Republican party members as well?

SBF said so but there is no public evidence of it, so far as I can tell. The federal government brought a charge against SBF due to his campaign contributions, so it can perhaps be expected that we will learn more about those contributions as this saga plays out.

> But Ryan Salame, another executive, gave almost $24 million to Republican and conservative causes, somewhat counterbalancing the giving to the left. Overall, according to Open Secrets, FTX donations to candidates were very slightly GOP-leaning, although contributions to individual politicians were only a small slice of the $70 million.

https://www.theatlantic.com/ideas/archive/2022/12/sam-bankma...

As Jon Stewart pointed out, they went with the classic formula of having “a guy for each camp.”

Here is where semantics get tricky and people are twisting facts. Fox who reported on this positioned it as SBF donated 40 million to democrats and barely anything to republicans. Fox has in several articles used Open Secrets and the number the report match open secrets. But they left out a big part of the story. Most of the 40 million didn't go to "Democrats," they went to democrat aligned super pacs. Open secrets also shows that FTX/SBF put 20-25 million into republican aligned super pacts. I believe one of board members of FTX, Ryan Salame, also donated about 15 million or 20 million to "Republican causes?" For me, I will just say we should probably lump all of these donations under a single entity.

The reality is. These guys were funneling tons of money into anyone who would take it. What is hard to extrapolate is, were democrats easier to buy on mass and that is why there is a higher amount? Or were republican votes cheaper?

[1] https://www.opensecrets.org/orgs/ftx-us/summary?id=D00007369... [2] https://www.politico.com/news/magazine/2022/12/09/crypto-sca...

NYT is not the government. It's a private business that looks at profit first, politics second, and impartial justice last if at all. The financial lure of a panel with SBF post-scandal must have been too much to resist. It's not even clear the panel (did it happen in the end? I'm not sure) would do SBF any good, given his tendency to self-incriminate. On the other hand I'm sure it was incredible for NYT ratings.

I don't think we'll ever see another defendant in these kinds of cases as universally hated by the public as Martin Shkreli. The transcripts from his jury selection made the news[0]. Some highlights:

"he disrespected the Wu-Tang Clan" (big problem in NYC, of course)

"he kind of looks like a dick"

"I would honestly, like, seriously like to go over there -"

[0] - https://www.spin.com/2017/08/martin-shkreli-jury-selection-t...

Elizabeth Holmes?

Shkreli did not get “hard time”, he got a basic, well-deserved prison sentence.

I find it distressing that folks keep pointing out that the investors did not lose money. Are they deliberately ignoring the fact that Shkreli had no right to take criminal risks with investor money?

I don't think GP is implying that it is OK to take risks with investor money. However it sounds right that you should get a longer prison term if you gamble and lose $8B than if you gamble and make some money on it.

On this note I am curious if political organisations will be required to give back the donations he made. It seems the right thing if they were stolen funds. But being politicians I'm curious if it will be rules for thee and not for me.

I wonder if the charities will have to give back their funding.

Yes they will have to. It is stolen money.

On the All In podcast Chamath used a term 'Fraudulent Conveyance'. The idea is that if someone receives money from a fraudulent actor, the entity that received the money has to give it back. Madoff was mentioned somewhere in the comments and the story is that people that got funds out of the Madoff situation before it fell apart had to give the money back.

We will see how it goes this time, but I suspect a lot of the donations will need to come back to the entity.

Chamath is probably just as sly as SBF; Shy of committing fraud, he dumped horrid businesses on public via SPACs.

We just had an election as well, which means most of that money would have been spent. How far can they chase it down? I can’t imagine random campaign staffers needing to pay back their wages.

Naive question here:

Wouldn’t you have to take into account due diligence when talking opportunity cost?

As in, someone who did not do their due diligence and had a higher risk tolerance would be expected to have a lower opportunity cost. In simple words, likely to lose money on this deal but willing due to the high return chance.

Relative to the amounts of money lost here the DD costs would have been a pittance.

> Other folks got money out of Madoff during his scam years, and the trustee says “I’m taking that money back to pay back others.”

What’s the limit on that? Dollars or time? I would be beyond furious if I was expected to help make someone else whole.

I don't think there's a limit when it's part of a criminal scheme.

It's infuriating for sure, but unfortunately it's the reality. If you gained from a Ponzi scheme that means you literally were given other peoples' money (directly).

I fully empathize with the absolutely epic degree it must SUCK to get a call and be told "yeah that 10% you've been earning for the past 20 years was actually someone else's money, you need to give it back."

Assuming you cashed out, wouldn't it be something like "that 10% you earned 10 years ago" because if you never cashed out then you're not liable.

My reply would be along the lines of: "Sorry lost it all in MtGox/FTX/Crypto/Vegas/Horses"

I mean, if the courts say you owe the money, you owe the money. If you lost it, looks like you got some debt to repay somehow.

The court would argue you didn’t complete due diligence and are liable for your mistake due to a crime taking place.

> I would be beyond furious if I was expected to help make someone else whole.

Such are the wages of being a beneficiary of a ponzi scheme. It would be a good incentive to do better research.

How are you supposed to get enough insight from any working fund manager to determine whether something is a ponzi? It’s not like they give you access to the books.

Mutual fund and ETF holdings are public information. Random fund manager? Good luck.

Pretty sure even private hedge funds have to disclose to their clients exactly what they hold, not Madoff's "just trust me bro" promise.

Madoff operated for close to twenty years before being exposed. He was regularly lauded for being the best by well informed people. What is an amateur supposed to do?

If the argument is, “Nobody is that good, you should know better”, does that mean Buffet’s scheme will start crumbling any day now?

> What is an amateur supposed to do?

You have two options.

1. Don't be unlucky. [1]

2. Or, you can make sure your society has socialized old age pensions, and that it puts in the work necessary to keep them solvent, and its citizens taken care of once they are past their working years.

[1] The easiest way to not be unlucky is to buy into a boring, diversified index fund. Berkshire may be a fraud, but it's unlikely the entirety of the SP500 is.

Well yeah that's why Ponzi schemes suck. Why should it be acceptable to profit from a Ponzi scheme? It's not your money at that point, whether you realise it or not.

The trustee has to prove that the transferee lacked good faith, which includes “when the information the transferee learned would have caused a reasonable person in the transferee’s position to investigate the matter further.” The companies which were required to repay Madoff money had “uncovered facts suggesting that [Madoff] was engaged in fraudulent activity” as part of their due diligence. https://www.govinfo.gov/content/pkg/USCOURTS-ca2-20-01333/pd...

>>I would be beyond furious if I was expected to help make someone else whole.

I mean, if you unknowingly buy stolen property, it will be just taken from you if the police finds out. I don't see how that's different.

> But if I had put that into a legitimate investment, maybe I’d have $180.

Or maybe zero. Investing is a casino unless you are very closely supervising your investments and have a thorough understanding of the underlying market dynamics. So better do your homework if you want to see some or all of your money back, preferably with a premium.

Yeah, you have to be a real genius to make money buying the sp500.

I think it was obvious that we weren't talking about index investing.

Do you know what opportunity cost is? Or perhaps you missed that part of the post?

While Tom Brady's endorsement has little economic value, it was money paid to him. I believe a bankruptcy court can undo past transactions, so that cash might be recoverable.

They can’t give Tom Brady his time back.

Of the people stolen from, Tom Brady losing a day filming commercials is pretty low on the list of things I care about.

Like he got paid $X for his endorsement. I would prefer that money go to the people whose life savings were stolen.

Is it really Tom Brady's responsibility to vet each and every one of his commercial offers? That seems unsustainable. He would have needed some pretty intimate knowledge of the crypto world along with the inner workings of FTX to know that it was a fraud. To me it seems like placing too much responsibility on people who shouldn't bear that responsibility.

Your sibling comment says this:

> Didn't exactly that happen, didn't Tom Brady put his life savings in FTX? :/

Which makes your comment seem funny or sad, depending on how you look at things.

This has nothing to do with knowing it was fraud or impending bankruptcy which has nothing to do with having a bankruptcy court claw back money given to you in preference of others. This is like Brady getting a bad check. So he doesn't get paid for acting. A lot of other people didn't get paid what they were owed.

I'm sure he has a PR person, agent, manager, etc.

So yes it is their responsibility.

Didn't exactly that happen, didn't Tom Brady put his life savings in FTX? :/

That’s a tough one as Brady wasn’t an investor or executive but a supplier. Will the media companies that FTX bought ads with also need to give back their fees?

Quite possibly. Even without fraud, transactions within 90 days to a year of filing can be reversed by a bankruptcy court. Brady's transactions are more likely to be reversed because of his ongoing relationship with FTX than the media companies's transactions.

With fraud, they timeline gets a lot longer.

> lighting money on fire

It's almost as if money is just paper and has little economic value. The same criticism you made of crypto.

Your bubble neighborhood likely cut down acres of wild land and trees unecessarily. We are all worst of for it.

Did Tom Brady actually receive the payment?

I'd say there is a good chance they can claw back some of the endorsement money. A celebrity endorser is more than just some vendor, it is someone that is lending credence to the scam either wittingly or unwittingly.

> Other folks got money out of Madoff during his scam years, and the trustee says “I’m taking that money back to pay back others.”

I wonder if things like the political donations could be clawed back.

Have they not just spunked it into cryptocurrencies?

> How much really was lost?

How much was really "lost"?

Now that SBF is charged on six counts of conspiracy, it's safe to say it's safe to not believe anything that person says. I don't believe the "leveraged trades gone wrong" angle.

I do believe there's a conspiracy. That's what several, including @Bitfinex'ed (a Twitter user exposing the tether fraud) and Marc Cohodes, said years and months before SBF was exposed for the ponzi boy he was.

They don't believe the fraud only stops at SBF / Caroline Ellison.

How much is going to be found depends on how far they investigate on the conspiracy.

A good place to start looking for a conspiracy to defraud is this: FTX's top lawyer, Dan Friedberg, happened to be colleague with Bitfinex's top lawyer. Indeed, they both worked at a company which defrauded online poker players by cheating on them (using a "god mode" on the server software they were offering).

I'd say that's a good start for the "conspiracy" angle: go look at Dan Friedberg's implication in the scheme. And at its relation with his former colleague now at Bitfinex. And seen that the Panamera papers exposed that Bitfinex/iFinex/tether/Deltec were all one and the same gang of criminals, and seen that it's a fact that Moonstone bank, which SBF bought in the US from Deltec's owner (at least partially) maybe, just maybe...

That it's time to look into the tether fraud to find the billions?

> FTX's purchases of IOU's (i.e., crypto) that declined in value are not likely to be recoverable. But Bitcoin still has substantial value.

This was kind of what Matt Levine focused on in his coverage of FTX - where did the money go? It wasn't just that they invested in crypto assets, they created their own crypto asset, assigned it a huge value, and put it on the balance sheet at an imaginary price. Used those "assets" as collateral to borrow real money. Then they spent real money on Bahamian property, political contributions, charitable contributions, naming an arena, and the KILLER - bailed out Alameda repeatedly using real money.

A lot was lost to traders whose profits came out of FTX's losses from market making.

If this was purposefully orchestrated as the indictment suggests, it's very likely that 100% of every deposit made to FTX could be lost for good. Minus the real estate purchases of course.

Crypto transactions are irreversible.

All of the money that Alameda Research lost (which they borrowed from FTX investors) to bad bets could have easily been won by SBF et al on the other side of the trade... withdrawn to safety and put in a cold wallet for whenever they all see the light of day again.

The majority of the money that Alameda lost to bad bets was propping up shitcoins.

SBF could have created an account on FTX under a pseudonym and taken the short side of all of those shitcoin trades, knowing exactly how much financial support they had and how to break them.

"How much was really lost?"

With respect to culpability for the wire fraud charges, arguably it does not matter. The crime is a devising scheme to defraud. The execution of the scheme does not have to be successful.

Even if every FTX customer gets a 100% refund of their deposits, SBF is still going to face prosecution. This is what makes his recent behaviour so childish, immature, juvenile and foolish. The transcript of his proposed testimony before Congress shows that SBF is anything but a "whiz kid". He is clueless. A pawn.1

1. https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rbgv1U_v...

"How much was really lost?"

How much what? Fiat money? According to the self-proclaimed crypto experts, the fiat monetary system is to be avoided.2 Why would crypto believers want fiat money.

According to a Google "engineer", the highly regulated, democratically-elected government that issues and guarantees fiat currency may seize it in the near future, referring the reader to "snopes.com" as an authoritative source. Not only that, according to the Google stooge, using fiat currency poses a risk of "total surveillance" and is undermining peoples' privacy.2 You cannot make this up. Employee of almost totally unregulated "tech" company, hoovering up the personal data and invading the privacy of hundreds of millions of people for profit, a company with nearly 140,000 employees and billions in the bank that does not even have a basic customer service line, is giving unsolicited advice about privacy.

2. https://apxhard.substack.com/p/why-bitcoin-is-different-from...

How much was really lost won't matter much in terms of prosecuting those who committed any crimes. And while it looks like a huge crime to me, they are still innocent until proven guilty.

It does matter to those who appear to have been defrauded. They won't be made whole. There will be opportunity costs, and I can't imagine it all being recovered. But if a significant portion is recovered, it would provide some help to the victims.

They need to freeze the crypto holdings until the next bull run.

From https://www.cnbc.com/2022/12/13/sam-bankman-fried-denied-bai... :

“Bankman-Fried's parents were animated during the proceeding, at times laughing or putting their fingers in their ears, according to Coindesk.”

… what in the world.. I guess they really think they are going to somehow get him out of this.. how do they not understand that this type of behavior is not in any way helpful to him?

Maybe they already got their millions secured away in some untouchable country and don't really care what happens at this point.

They were already quite well off, now their son is in trouble.

"My son is going to prison but I have secured my millions so it's fine" is generally not a thing.

Maybe he never was their favorite son anyway.

Oh I think it's the opposite.

I think they thought of him as the second coming of Jesus himself, and he felt he had to do extraordinary things to live up to that image (which of course is impossible).

I think he secretly hated it and that's why he trashed his own hypocrisy in some interviews, saying that the charity talks were all an act and not true.

And I also think that's a big part of his "I'm stupid / I fucked up" line of defense. Yes, he may think it helps his case (but is he actually that naïve?) But the main goal is to tell his parents "see, the genius you thought I was is actually a complete idiot, what do you make of that?!?"

I think he's happy to suffer if that makes his parents suffer more.

(Of course that's all speculation and pop' psychology and as such isn't worth the electrons it's typed in; but it's a possibility.)

I think that it is a thing for a shockingly large percent of parents. Historically children were the retirement plan (in addition to labor for the family). That type of thinking is fairly common.

But aren't his parents pretty successful lawyers who are pretty well of on their own? There are usual family pathologies and unusual family pathologies, and this looks like the latter.

I’ll rephrase. There are too many parents who don’t care about their kids or what happens to them. This tendency goes up a bit, I think, if the kids are not necessary for retirement or care when old age sets in.

> Historically children were the retirement plan

They still are. It's just that the retirement plan has been socialized to the level of the nation state. The labor of the young takes care of the old. This is literally true in the case of social security which is funded by taxing current productive labor.

This isn't necessarily bad, because it's the way it's always been. But it is something like a multi-generational ponzi scheme. It can work for a very long time, but eventually, the last generation is left holding the bag with no one to pass it onto.

> This isn't necessarily bad, because it's the way it's always been.

I'm not sure this sentence make any sense. The same could be said about slavery. Is slavery not necessarily bad because it's the way it's always been?

You're right, that sentence is bad.

Maybe I should have said it isn't obviously bad or some new, modern evil that we just invented. It's how human social groups that take care of their non productive elderly have always operated.

The futurology trackers have "breakdown of intergenerational solidarity" as a possibility with no given time frame. It really didn't occur to me how implicated the nation state is in this until you pointed out the fact (in retrospect, glaringly obvious) that this function of family life has been subverted by government.

Do you mind dropping a link to what you're referencing? I haven't heard of it.

But yeah, I do see it as a potential systemic problem. Because the care for the old has become so massively socialized, we also find ourselves in a situation where it becomes individually advantageous to not do the personal sacrifice of having and raising children. Not only is having children a huge financial burden, but it's also a huge time commitment. And when you don't get to primarily benefit from you own children's productivity, that burden isn't as highly rewarded as it has been in the past.

I think we're starting to see this break down in many first world countries that don't have a replacement birth rate. I could see the reactions being one of...

1) start penalizing the childfree. There's a long history of this solution going back to as far as ancient Rome, https://en.wikipedia.org/wiki/Bachelor_tax.

2) increase the social reward for having and raising children. We already do this to some extent, e.g. the child tax credit.

3) develop non family oriented baby mills. Basically state run institutions that raise (and possibly even incubate with artificial wombs) children at an industrial scale. Brave New World is a classic example of this taken to the extreme. We already do this to some degree with public schools and face increasing calls to expand it with free preschool. If we can figure out how to produce healthy, well adjusted members of society with the greater efficiency of 1 adult "parent" to 30 children, like we do in school, rather than 2 parents to 1-5ish children, then we'll probably do it. Currently, it doesn't appear that we can do that, judging by the outcomes of orphanages.

It appears on here, for example, under the "Wildcards":

https://espas.secure.europarl.europa.eu/orbis/sites/default/...

The last generation will have a lot more to worry about than who will take care of them in retirement.

That's exactly the point. The last generations will have done their jobs supporting their elder predecessors, but won't have anyone to come after them who will take care of them.

Left holding the bag.

The last generation will be too busy trying to backpedal their way out of existential doom to take care of their elders. Assuming they make it out of the cradle at all.

I'm glad you have great parents, but I think you vastly underestimate how much many parents do not care about their children, and will sacrifice them for their own well being.

Most caring parents would aggressively caution their children from heading down the path SBF went, especially if they're smart, educated parents.

There are no "boy geniuses" out there like many lead SBF to believe he was, people from prestigious backgrounds know this better than anyone. There are some really smart people out there, but anyone being propped up the way SBF was is being setup.

I don't have any sympathy for SBF, but a lot people whose names we'll never know where more than happy to set him up to think he was himself an unstoppable genius because that helped them sell a product and they know that it will also help focus all the blame.

His parents are Stanford law professors, so they are smart and educated. But doesn't mean that their child has to listen to them or to behave in an ethical manner.

That's the thing. You can do everything you can to educate your children and teach them right from wrong, but at some point they are free-thinking adults. Of course you would be distressed if they end up taking the wrong path, but underlying that you would know that you did your best and it's not your fault.

You'd be surprised.

The number of self-absorbed parents who care about their children only as accessories to their own lives, to be embraced when useful and ignored when inconvenient, is staggering.

They watched their own flesh and blood son transition with breakneck speed from a high rolling billionaire who hobnobbed with society's elites to facing spending the best years of his life in prison, a disgrace to his family and their legacy. How do you think you'd cope with that psychological ordeal?

Sure as hell wouldn’t laugh and put my fingers in my ears during a hearing. They are professional lawyers. Time to man up and not put your son at even more risk. Who knows how involved they’ve been in his shenanigans up til now, but it’s time to stop the madness..

This reads like a stress response to me. I don’t think realizing your child is probably going to live behind bars for the rest of your life and your family will never recover is something you “man up” through.

I agree. People act weird under extreme stress. Once when I arrived at work my boss was grinning. I asked him what was going on and he told me my co-worker tried to kill my supervisor. I laughed. Other co-workers were laughing and grinning too.

What happened with the co-worker? (Prison?)

Academic lawyers (his parents) are nothing like trial lawyers. Don’t expect them to have a good poker face.

The act never ends. Surely, in a decade or two or three, SBF will be looking all innocent from behind bars and still unable to open his mouth without incriminating himself.

I wonder how many others will be charged. This will be more difficult than walking all over this guy, and I seriously doubt he is alone in all of this.

Best years? More like all the years.

He should not go to prison for life. Nobody should ever go to prison for life, for wasting money. Money is literally made up. Sure, opportunity cost is real, but seriously nobody should ever lose their life for money.

What happens if they money was someone else's means to pay for their health care?

Money is made up - that doesn't mean it doesn't have consequences.

I am of the mindset that non-violent offenders, should not suffer a life penalty regardless of their alleged crime. They played a game and lost, they should not lose their head as well.

A game with whose stakes?

As warning, not as victim blaming, I'd like to point out that you should never ever risk money that you can't afford to lose on high-risk investments. Especially not extremely high risk stuff like cryptocurrencies, NFTs and similar scams.

Hear me out, what if we allowed people to access health care regardless of who has how much money?

While your direct point is valid (for the US), you're missing the general point.

Money can be tied to life changing/life threatening events or situations in many more scenarios.

The archetypal scenarios are people losing college money, retirement savings, downpayments for their kid's apartments/houses, etc.

There are many ways in which money is very, very real.

Anyone who still clings to this "fiat" thesis is just detached from human reality.

DPR is rotting for life, for contracting a hit on an entirely fictional person and mostly conducting a very upstanding market. I never thought that was fair, but US laws are US laws.

I'm not familiar with what you are referring to, however I would argue that attempted assassination <> losing custodial funds.

DPR == Dread Pirate Roberts == Ross Ulbricht (Silk Road operator)

DPR =/= Ross Ulbricht, at least not in reality.

FBI agents who were proven to have access to that handle are also in prison for it. There's no 1:1 "Ross is DPR," and that's part of the problem.

Think about it this way. Money is people's time. SBF stole billions of hours of people's personal time. Effort, savings, sweat, tears all bundled in what we call money. Why shouldn't he repay them with his own time in jail?

That doesn't really repay them anything.

He stole billions of possible retirement money. Of course he should go to prison for life.

How will wasting his life behind bars help bring restitution?

Making him grind out restitution at $1/hr on hard labor would do it.

Contrary to popular belief, prison is not entirely about reforming people but part punishment as well as protecting society from repeat offenders.

Also, he chose to open himself to the dangers of wasting his life behind bars when he enganged in incredibly illegal activities. It's not hard to not do that.

True. The focus should be as much on rehabilitation and restitution.

And quite probably are near the top of the clawback list if it turns out that any of the funds ended up with them. They have very good reasons to be distressed, their sons future behind bars is only one of the things they need to be worried about. Their whole world is crashing down around them, besides of course becoming persona non-grata to pretty much all of their friends and quite possibly family in case others got sucked in as well. I don't envy them.

Oh, it's worse than that. There will at least be civil suits. Possibly criminal prosecution.[1]

NYT: "Mr. Bankman was deeply involved in FTX. In its early days, he helped the company recruit its first lawyers. Last year, he joined FTX staff in meetings on Capitol Hill and advised his son as Mr. Bankman-Fried prepared to testify to the House Financial Services Committee, a person familiar with the matter said. FTX employees occasionally consulted him on tax-related matters, the person said. Mr. Bankman visited the FTX offices in the Bahamas as often as once a month, a person who saw him there said. ... He and Ms. Fried stayed in a $16.4 million house in Old Fort Bay, a gated community in Nassau, the capital of the Bahamas; the couple’s names appear on real estate documents, according to Reuters, though Mr. Bankman-Fried has said the house was “intended to be the company’s property.”"

His class at Stanford has been cancelled.

[1] https://www.nytimes.com/2022/12/12/technology/sbf-parents-ft...

It appears that his goose is fried, not cooked. As a lawyer he really should have known better.

That’s what gets me about this whole thing: two law professor parents. A gaggle of young, incredibly wealthy people who all had their tickets pre-punched with prestige schools, A-list jobs like Jane Street, etc. I have to admit, this story has pissed me off more than most of these corporate frauds.

It's never enough I guess. Holmes is another case like that.

From that quote it isn't clear precisely how Mr. Bankman was involved with his son's firm, how much he was an insider, particularly in the later days as the fraud presumably intensified. It's plausible that SBF, digging himself deeper in fraud while getting high on his own supply, insulated his law professor father from the seedier proceedings at his darling company. Probably will take the courts to determine the apple's proximity to the tree.

> ... a disgrace to his family and their legacy

Count 8 of the indictment: "Conspiracy to defraud and violate the campaign finance law".

Who was running the fundraiser? SBF's mom.

Who was helping SBF trying to obtain regulatory capture of the crypto currency exchange market in DC? SBF's father.

I'm not sure SBF is the only one to bring disgrace to that name, that'll from now on always be associated with fraud indeed.

Maybe this is a case of the apple and the tree?

This is mainstream media being sensationalist per usual. This is what the original Coindesk article wrote.

"They appeared to oscillate between dejection and defiance, at times holding their heads in their hands and clasping their hands. Bankman-Fried’s mother audibly laughed several times when her son was referred to as a “fugitive” and his father occasionally put his fingers in his ears as if to drown out the sound of the proceedings."

It definitely sounds more like a stress response.

Lol. When Coindesk is bringing more nuanced news reporting than CNBC, you know things are whack.

things be whack

I wasn't acquainted with them until roughly 6 months ago, but from what I've seen Coindesk has actually been an excellent publication.

Media arm of digital currency group. Fine people, but just as a disclaimer.

They both make money by selling ad space and attracting eyeballs to that space, but the audience of Coindesk is going to be much more interested in the financial details, whereas the more general audience of CNBC is going to be less interested in getting the details of the story right, and more likely to read a story that is lightly sensationalized.

"less interested in getting the details of the story right" is exactly what is "whack" about media today.

Some media seem more interested in getting the details of a story wrong.

Wrong vs right is unimportant when short term profit is at stake.

Or maybe it's better said that Coindesk readers are much more likely to have real skin in the game, and therefore highly penalize news outlets that give inaccurate information.

So you’re saying that the facts in the sentence are true

What a laughable game of telephone. A writes “holding their heads in their hands”. And B, presumably to add their own twist to the story, perhaps to avoid quoting A verbatim, turns it into “put their fingers in their ears”.

Edit: Just realized that A actually did speak of the father putting his fingers in his ears.

I think being faced with this or having your kids faced with this probably elicits all kinds of stress responses and coping mechanisms.

I could totally see myself engaging in nervous laughter if one of my kids fucks up this badly. I could also see twisting my worldview to make my kids innocent in my own mind, as a form of denial, unconditional love for the kids, etc.

From press reports it seems possible those parents did a poor job raising him, that the apple didn't fall far from the tree, but I think also we shouldn't rush to judgement or draw conclusions where another explanation might suffice.

They must live in ivory towers and don’t understand exactly how bad this is..

The SEC's complaint in its civil case provides more information about the details of the accusations against him: https://www.sec.gov/litigation/complaints/2022/comp-pr2022-2...

See also the HN discussion of the SEC charges: https://news.ycombinator.com/item?id=33967386

Does this strike anyone else as way too dramatic a narrative for a court document? Like it's written with a deep personal beef rather than sticking to the facts. Is that normal for civil complaints of this type?

To be clear I'm not defending the guy, I just feel after reading the first few pages like I'm flipping through a cheap tabloid.

I noticed that too, and interpreted it as a sign of confidence. I can't imagine a regulatory group writing something so dramatic without them being sure it's a home-run case.

Most well-drafted civil complaints are written this way. It’s hardly confined to complaints drafted by the Government.

Legal process is driven as much by narrative as it is by facts and allegations.

Let’s see if his ‘I’m baby’ defense works in court.

You see your honor I simply didn’t know I wasn’t supposed to siphon customer funds from one of my businesses to another.

Can I truly be charged for a crime if I pretend to be dumb after I get caught?

His stupidity defense claims that he thought it was a loan, and he didn't know what Alameda Research was doing with the loan.

does that even make sense? If it was a loan against his customer's assets then the assets would still be there, and the exchange would simply be broke. If the funds are gone then it doesn't matter what for. He had no business lending his customers money away, he ran an exchange.

Still, HE WASN'T SUPPOSED TO LOAN THE CUSTOMER MONEY!! If he didn't know that than why was it in the terms of service that his company wrote?

Because he's stupid and didn't read anything the company's lawyers wrote. That's the whole defense. Saying he loaned money to another company because he didn't know any better works better as a stupidity defense to get a more lenient sentence than what coffeebeqn wrote.

Assuming for sake of discussion he really is that dumb, then he was being used as a puppet by someone else. He'll need to identify that person or people and their stories and evidence supporting them will need to be compared with his.

I mean, it's not like this was some super fine print detail here though... It (we hold your money/crypto for you 1:1 isolated and separated) was basically the entire point of the product.

I thought the whole point of the product was easy access to margin trading. https://help.ftx.us/hc/en-us/articles/360046850054-Spot-Marg...

> Let’s see if his ‘I’m baby’ defense works in court.

It was a foolish move to open his mouth at all on the matter, let alone go on every podcast that invited him and took every interview to spout his self-incriminating non-sense and riling up the Media and the public's ire in the process.

If that was his goal, he has terribly failed to establish anything that suggests it will work

Worst yet... is his choice for chief counsel:

In the U.S., Bankman-Fried has hired defense lawyer Mark Cohen, who is best known for representing Ghislaine Maxwell during her sex trafficking trial, as well as Mexican cartel boss Joaquín "El Chapo" Guzmán.

This string of fails along with his lawyers high profile cases (that ended unfavourable for his clients) makes it seem like he is screwed. He will remain in prison until February at Fox Hill [0].

Personally speaking, he and everyone affiliated with FTX and Alameda have face severe, costly and lengthy sentences; if they're going to go after influencers who lend their name and reputation to these scams then scrutiny has to be made for those politicians, media and VC insiders who also participated in this scam. This has to be the only inevitable outcome in this because without any oversight on that side of things this vanity given to businesses that operate with the false legitimacy of being licensed or regulation will never be addressed if it doesn't expose how those things are granted when you have resources to spend to buy your way into compliance.

0: https://www.forbes.com/sites/davidjeans/2022/12/13/sam-bankm...

Is that the kind of high end lawyer you get when other high end lawyers say ‘No’?

Or maybe there's one set of lawyers who are good at defending innocent defendants and another set of lawyers good at defending guilty ones?

Not a lawyer, but two different high level policies for defense depending on whether your client is innocent or not makes sense to me. At the highest level, it may even come down to two classes of lawyers with expertise in each category.

Makes sense to me. One type of defense is focused on acquittal. The other is focused on getting the shortest sentence and/or smallest fines.

It's the kind of lawyer who will get you the best outcome when you know you'll be convicted of some very bad things.

Yeah he went to Michael Avenatti first but he had a scheduling conflict.

No, it’s the kind of lawyer you can buy with money whose origins you can’t explain.

Speaking of which, I sincerely hope (though not holding my breath) that they take a good, hard look at the Sequoia partners who enabled this. Diligence is theoretically part of their job and they either committed an act of gross negligence by not doing any, or they committed an act of conspiracy by seeing what the game was and blessing it.

Let's see if he goes full "My dad is Li Gang!"

One thing to note about the charges: a number of these charges are "conspiracy" charges, meaning that there will be more people indicted. Most likely, his ex, who has probably already been talking to the feds in exchange for leniency, and possibly also including his one or both of his parents (see Count 7).

Also interesting to note that Count 8 relates to campaign finance violations (for exceeding contribution thresholds and fraud related to making or reporting contributions). PACs don't have donation thresholds, so this appears to be related to the alleged "dark money" contributions he claimed to make in the summer (rather than the donations to the Democratic PACs in the primaries). It's not clear if this charge is based solely on his claims or if there is actual evidence of improper contributions.

Interesting wording. I am not a Lawyer but have had a lot of interest in this case and others like it.

"SAMUEL BANKMAN-FRIED" a/k/a "SBF," the defendant, and others known and unknown did combine, conspire, confederate, and agree together and with each other to commit wire fraud".

Does this indicate that they intend to charge more people in the organization under RICO laws? Or is that just standard legalese for any wire fraud case.

IANAL either, however: RICO's pretty uncommon and it's probably not RICO. See for example [0]. But absolutely possible they charge many others.

[0] https://www.popehat.com/2016/06/14/lawsplainer-its-not-rico-...

Pretty standard legalese from where I'm sitting but I'd expect more people to be charged. He didn't do this all by himself. RICO wouldn't really apply here, they've already got the top guy, and usually RICO is about charging the top guy with the little guys' crimes.

There may already be sealed charges against others but yes, there will likely be charges against others. Some conspirators may receive or may have already received immunity in exchange for testimony, though. It will take time to determine who else was involved and to what extent, though my guess is the focus will be on SBF.

This is also great language for encouraging other conspirators to make a deal to testify even if the JD has little evidence against them. It's almost like the police lying and saying, "We have a video of you doing xyz."

Count 1 is "conspiricy to commit wire fraud on customers".

A nessasary component of that charge is the participation of others.

In count two, "wire fraud on customers" there is no mention of consipiretors.

I expect that we will see more charges, but this wording doesn't particularly indicated it.

No.

RICO is for charging the boss if you don't have direct evidence against them. In this case they do, so they don't need it.

Also the phrasing here is just wire fraud (18 USC 1343) and conspiracy (18 ISC 371). If they were going towards RICO, you'd expect to see them talking about "patterns of activity", "operating a criminal enterprise" or other phrasing from RICO statues (18 USC 1962).

> Does this indicate that they intend to charge more people in the organization under RICO laws?

No, there are no RICO charges here, and if SBF isn’t getting RICO, I doubt underlings are.

These are just regular conspiracy charges. It is possible sonenir all of the other alleged conspirators will be charged with conspitacy, though.

The line after that contains "conspirators known and unknown". So, the US SDNY has already decided to charge some people. And the US SDNY is going to charge some other people, but they are not aware of their identity.

RICO is for using underlings to charge the boss. In this case, the boss is being charged. Conspiracy charges here imply co-conspirators.

Here is SBF's full statement: https://www.forbes.com/sites/stevenehrlich/2022/12/13/exclus...

Worth a read

Does such statement, given what SBF did and said, qualify as treacly and sanctimonious?

Not really. He's a pathological liar. There's probably great incriminating evidence there (as in lies that can be exposed as lies for not a word of that person can be trusted) and it's good to see him whine that his accounts got blocked but it's not a good read.

The six counts of conspiracy are a great read though. I wonder who his co-conspirators are but in case they're in the Bahamas those implicated may not be sleeping that well: now they just saw that even the bahamian authorities bow to Uncle Sam.

The part about the Chapter 11 legal fees is particularly interesting. It starts on page 8.

Oh my god. Reading that leaves me with a single opinion: he is a broken, corrupt, manipulating fraud.

The aggressively useless chin mask in the lead photo sends a certain message.

I wonder what he means by saying that "the password to my LinkedIn account still hasn't been returned". Is he claiming that the "Chapter 11 team" has taken over his account and changed his password? Is that... normal?

They probably changed his keepass or bitwarden main password, which effectively locks anyone using those products with generated passwords from entering into anything.

To my knowledge, he has yet to give a reasonable answer why Alameda was using FTX customer funds. He can't, because that should never have happened, and is considered fraud anywhere.

This part's pretty incorrigible: "I have potentially pertinent information concerning future opportunities and financing for FTX and its creditors."

> This part's pretty incorrigible

Sorry I don't understand. Can you elaborate?

He kept reaching out to the Chapter 11 exec with a fantastic (as in fantasy) notion that he knew a potential investor willing to sink billions of dollars into paying back users, then wondered why he wasn't getting a response. The exec had already told him, "There's nothing to save Sam". Can't imagine any sane investor throwing away $8B+ of their own money to dig FTX out of their hole.

Lol. Not returning the call of the guy who built a multi-billion dollar business from scratch even after he says he has an investor willing to invest billions is shady as fuck.

As a FTX.us user with funds held by them, I'm deeply suspicious of John Ray https://en.wikipedia.org/wiki/John_J._Ray_III.

Can I demand he speak to SBF?

He's a corrupt coward if he won't even speak to him.

Somebody is a crook here, and I'm thinking it's John Ray.

- Breck Yunits (I'm no anon coward, unlike the others talking a lot of trash)

Go to bed, Sam's friend

Lol. Never met him. Don't know him. (AFAIK, maybe years ago we crossed paths in the valley, don't remember if we did)

Nice anon account! I hope you are being paid for your shilling.

Is there some reason why this kind of stuff is typed up on a typwriter?

Various legal systems have standards for the form for which documents should be submitted to them which are surprisingly nitpicky in terms of items like fonts and spacing. Of course, these standards were created when typewriters were the dominant use case, so had deference to what typewriters could actually do. Even though most of the typewriter use has fallen out of fashion, the standards remain, with the results that the documents look like they came out of a typewriter even if (as I suspect in this case) it's just been printed then faxed.

At this point it also probably makes it easier for law-specific OCR software to round up the standard metadata. With the sheer volume of paperwork in that industry, nobody is interested in reinventing the regex wheel for every document.

Not to mention the real cost of every person reading each document having to relearn how this document is laid out vs every other document. There is a non-trivial human cost to not having a standard document format. Even if it is old and crusty.

Also looks like most courts have a style guide for you to follow: https://www.jud.ct.gov/Publications/Manual_of_style.pdf

Doesn't explain why they'd never get with the time and accept electronic submissions, which are probably easier on their end too.

Federal courts accept (and often have rules requiring-by-default, for most purpose) electronic submission.

And you didn’t feel the need to mention that in your reply to the parent comment, that introduced this assumption that I was building off of?

Electronic submission still involves uploading a PDF, which has to follow the court's rules for layout of printed pages.

It just means it the file gets directly added into the case's docket, rather than having to be manually scanned in by the clerks' office.

You'd think by using electronic submission they'd go with machine readable format.

That would be a lot more work (because of the need to accept exceptional paper submissions, and get them into the required format) and cost for both the courts and every law office that might have need to file in federal court, for potentially very little benefit, since the processes filings support are human processes for the foreseeable future, independently of the data format.

Also it makes things more equal. Like appellant courts can tell only x number of pages. And for that sort of limit to make sense the line spacing, font size and margins need to be consistent. With only set of fonts allowed.

Courts really don't want to argue about how any submission is laid out and in best case they get to just throw out something looking wrong saving their time.

Consistency also means that rules that state “pages” are meaningful limits, not something subject to unresitricted gaming, and that they retain that over time.

Also a method my high school English teacher used to standardise pages after one too many (i.e. one) comic sans 18pt hand ins.

We could use a computer at a certain font, linespace and margin so a 10 page essay was consistent.

Which was lots better than other teachers who just said ‘nope, handwritten please’.

> Also a method my high school English teacher used to standardise pages after one too many (i.e. one) comic sans 18pt hand ins.

Yeah, exactly. The courts are more worried about Helvetica Narrow 6 than Comic Sans 18; flip side of the same coin, since they tend to have upper rather than lower bounds.

There's definitely a fax machine at some point in this document's journey.

Scanner probably, to capture the signatures and the clerk's stamp on the front page.

This was my exact thoughts too! surely human beings from the 21st century could have improved on this.

However I'm also pretty sure that lawyers have found a loophole to prevent their jobs from being automated, if you just make using technology illegal/"not to standard" then they can keep billing $500 per hour to use a typewriter

You think lawyers personally are the ones writing documents?

FYI whoever down voted this, no they generally don't. They have staff they pay to do that and they look docs over before signing them. That is when they aren't using generic templates that the paralegals just fill out

Yes! Also, why do they feel the need to do the "a/k/a SBF" after every mention of the guy's name? Say it the first time then just call him SBF thereafter. I think Typewriter Guy must be paid by the character. Another petty thing: I've never seek "a/k/a" with slashes like that before -- "aka" is sanctioned by Merriam-Webster, and "a.k.a." is also acceptable for constipated purists and The New Yorker.

Probably an 80's kid. I remember writing a/k/a like that and I distinctly remember running essays through a character counter and adding filler words.

> never seek "a/k/a" with slashes like that before

F/k/a is also common. I only see it in legal and compliance contexts.

Seems to be standard in those type of documents, e.g. https://www.justice.gov/sites/default/files/usao-sdny/legacy...

There's some discussion at https://typographyforlawyers.com/ about the current state of things, rules and requirements, and how to improve things.

Rules vary somewhat by locale, but in general:

https://www.insd.uscourts.gov/sites/insd/files/local_rules/L...

There is a method to the madness. Double spacing allows for manual markup and edits, for example.

It’s not typed up on a typewriter, although it may appear that way. Back when I worked in a federal district court, we used WordPerfect on Windows to draft judicial documents using a standard template that looked much like this; I wouldn’t be surprised if they’re still using it today.

When do you think we'll start seeing the politicians who received SBF's illegal campaign finance contributions insisting on returning them to FTX customers so as to be above suspicion or reproach?

I'm waiting for Sequoia to be put in jail.

It will be a long wait, unfortunately. More likely: Sequoia will be shouting from the rooftops that they too are victims.

They... literally... are? The SEC has charged SBF over exactly that.

IANAL but that depends on what their agreements with LPs were, doesn’t it? The managing partners have a fiduciary duty to the fund so couldn’t they be held criminally liable if they failed to do some due diligence stipulated by an LP?

Normally these things are all agreed at the time of the original commitment and the closing of the fund, so assuming there are LPs each and every one of them should have a copy of the obligations of these funds.

I'd be interested in the theory. Their investors aren't exactly mom and pop operations. But I do agree that their promotion of SBF was asinine though that's all clear to the world now. And I'm not in favor of criminalizing bad investments. Sets bad precedent and incentives.

The big issue is that money has already been spent

Already started: https://www.texastribune.org/2022/11/29/beto-orourke-sam-ban... . Though I somehow doubt everyone will follow suit.

Does this really count though? They said returned it because they weren't expecting it, long before any of the shady news about the company came out.

I can respect that move in general, but it's hard to see it as a response to the scandal.

There is a campaign finance charge.

The bankruptcy guy has to trace the money flows to political campaigns. Judging from his House testimony, this will take several months.

I suspect the pressure will be immense to return funds once the donations are officially declared dirty during the bankruptcy proceeding.

Also, if in fact SBF donated to both sides, then it will be quite simple for politicians to refund the money.

I'm curious what kind of plea deal Caroline Elison got.

I'm guessing a, you're still going to prison, but it will be for a few years instead of potentially your entire life.

Wasn't Alameda the entity responsible for losing most of the money? Seems wrong that you could get less than a double digit sentance for that - even if you roll over for the prosecution.

Losing money is legal. Stealing money is not. I have a hard time believing she didn't know where the money she was losing came from, though.

When she gets 18 months to his 20 years, I think the two of them will be used in Goofus & Gallant-style comics in law school to demonstrate the importance of shutting up and letting your lawyer do the talking.

More like why it's better to be a small fish than a big fish when the legal proceedings start.

Right. Never be the top top guy. Don't be the fastest car on the road. And shut the f up Friday [0]. I think he thought he could do a media blitz but stealing a bunch of other people's money for ones gambling addiction is generally frowned upon.

[0] https://www.youtube.com/watch?v=sgWHrkDX35o

The charges against SBF add up to over 100 years.

It should be noted that SBF is facing 165 years in prison.

That's a maximum sentence, which is unlikely to match what he's realistically convicted of.[0]

Still, he is likely to spend decades in jail.

https://www.popehat.com/2013/02/05/crime-whale-sushi-sentenc... ctrl-f "guidelines"

Running through the sentencing guidelines on the wire fraud hits 15-life real fast though. The sentence increases with the amount stolen and he stole a LOT of money (so much that the table doesn't cover it! It only goes up to $550 million).

This was said about Holmes, too. It matters what he actually ends up convicted of. Early speculation always runs high.

Not so much. Holmes guideline sentence redlined the sentencing levels too; she got a significantly lower sentence than the guidelines allowed.

I got downvoted yesterday for implying this. Is it true that her sentencing was "right in the middle?"

https://news.ycombinator.com/item?id=33963823

I'm fuzzy on this too. Her sentence was close to what the prosecution asked for, but the prosecution also seems to have asked for something much lower than the guidelines allowed --- so did the PSR.

That's right. Holmes' sentencing guidelines went over the top of the scale (45/43), and the prosecution recommended a variance to lower that. The guideline calculation was 80 years.

- "Through this variance request, the government also acknowledges that the Holmes’ crimes were not motivated by a short-term desire for financial gain. Second, this recommended sentence satisfies the ‘sufficient but not greater than necessary’ standard found in 18 U.S.C. § 3553(a). Finally, the Court will achieve the important sentencing goal of providing adequate deterrence to criminal conduct through a 15-year custodial sentence."

https://www.thedailybeast.com/theranos-founder-elizabeth-hol... (Mitchell Epner)

If this happened before her trial, she might have walked imo.

So aside from the totaling the points on sentencing guidelines, wire fraud actually maxes at a 20-year sentence per statute, and like Elizabeth Holmes, convictions for multiple counts are usually served concurrently. SBF fucked up a bit in that wire fraud that affects financial institutions (Counts 3/4) max at 30-years. But as a first offender, it'd be highly unlikely he sees more than half of that.

https://www.law.cornell.edu/uscode/text/18/1343

I thought it was standard federal prosecution practice to put up huge potential sentencing numbers, then negotiate downwards in hopes of securing a swift process, and therefore the initial indictment-implied sentencing number carries very little context?

It’s not even a negotiation tactic, the defendants lawyers know the sentencing guidelines. It’s a news release tactic.

Annoyingly, news outlets just recycle the hype. Tired of everything being exaggerated for attention in modern society, this is one reason faith in social institutions is on the wane.

This is the rare occasion where the hype sentence might actually give you the spirit of how serious the charges are; he's "really exploring the space", as Bruce Dickinson might say, of how severe you can make a wire fraud charge be.

What are these campaign finance charges doing here? They seem to be completely unrelated to the FTX collapse, he is accused of bypassing campigan finance limits by donating under other people's names.

Was he already under investigation for these, or was it something they discovered while investigating FTX?

> What are these campaign finance charges doing here?

If police get a warrant to search your basement for heroin and find a pile of dead bodies, what do you think happens next?

A really disturbing party?

I agree with hall0weener. Prosecutors often start with a whole bunch of charges and then hone in on the ones they feel are worthy of pursuing.

> What are these campaign finance charges doing here?

Sending a message.

He was trying to influence government policy that directly affected his business. This is like a level or two below bribing the SEC and CFTC to look the other way while breaking regulations.

So 4 counts on wire fraud and then also commodities fraud, securities fraud, money laundering and campaign finance laws. For the moment, if we set aside whether these will be proven, how bad does a stack of charges like this look for him if they are proven?

In legal parlance, he will be "fu*ed."

From a quick google search (not promising this is 100% accurate, but I searched for sentencing minimums)

1) Wire fraud: 121-151 months

2) Securities fraud: 6-36 months base (there are multipliers apparently)

3) money laundering: 70 month average is all I could find

4) Campaign finance: seems to be more monetary based

Not sure how a plea deal/severity of charges would change this though. Ex: when you are committing billions in fraud that probably has different guidelines than the average securities fraud of a few million or whatever.

Fraud is a 2b1.1 crime, so the sentence scales with the "losses" to the victims; you can get +30 levels off that alone, which catapults the sentence into double digits.

It strikes me as a weakness in our system that this is keyed to the $ amount. You can defraud a person of modest means of $50,000 and wipe them out financially; you could defraud some rich people of $2 billion without it impacting them in the slightest. This strongly incentivizes preying on the weak.

I agree, it's a weakness (maybe not for the same reasons you give, but who cares).

Anyways, my prediction is that if SBF is convicted, he is going away for all time.

It is considered . The levels take into account financial hardship caused to any victim.

Knowing how connected the guy is, I'm guessing he'll only serve a few years at most. I sincerely hope I'm mistaken.

Eh, it feels like he may have donated a lot, but he wasn't crazy popular. Plus, not like he's had a long track record of donations over many years. I am not sure anyone with much influence will stick their neck out for someone like him

And also the money's gone (Probably). It's not like he has tonnes of money hidden away like other rich people on trial, so even if he gets bailed out by being buddies with the right people, it's not like he will make billions in campaign donations again any time soon.

I agree; politicians have a singular goal -- reelection. Supporting SBF at this point can only hurt. They will not be extending him any favors.

What do you expect politicians to do with respect to prosecution by the DOJ? Genuinely curious

How does political corruption work? We would need to visit a party in Washington DC to be able to describe it precisely, but it probably can be summarized as “one hand washes the other.”

Very imaginative, but a little short on evidence.

You think there is no evidence that corruption exists? Or maybe you think it’s just “a few bad apples” problem?

I think you haven’t provided any evidence that politically connected people routinely avoid prosecution.

Yep, once they realize more money won't be coming, past donations aren't worth much in the way of future favors.

Being extraordinarily connected did not help Madoff much: he was sentenced to 150 years in prison and died there last year.

The cynic in me says that it really does matter who you defraud. Where Madoff went wrong was ripping off other rich people. So, if SBF defrauded more upper- than middle- or working-class folks, then he's screwed.

This is silly. You think the career DOJ prosecutors are looking at the list of victims and only deciding to prosecute if there is a rich person on the list?

A lot of the things that defraud non-wealthy people (multi-level marketing, all of those "supplements" you can buy in the medicine isle, false advertising) aren't illegal or practical to sue over.

Let's look at one particular example, the stop the steal scam. Thousands of people were tricked in to donating to the ringleaders of an impossible political cause based on false claims, and none of them are going to jail for that in particular. You could find dozens of similar examples just by keeping an eye on the news, but nobody thinks about it because a certain type of con with victims that professionals can't empathize with has become normalized.

Or BLM leaders taking millions in donations and using it to buy houses.

Didn’t Bannon et al. get indicted for a very similar scheme for some impossible border wall project? Seems like these things require patience

You don’t think Sequoia is among those pushing for prosecution?

Being extraordinarily connected did help Epstein though: he only spent one month in jail.

Only when the deal flew under the radar. The prosecutors even kept his victims in the dark in order to get away with such a soft deal.

Once Epstein and his crimes were splashed all over the news he was looking at a much worse outcome.

GP was making a dark joke.

Connections purchased with money only last as long as the money does.

It depends on how much the court thinks he stole (of the billions). The US Sentencing Guidelines tops out at around $550 million dollars, which adds 30 levels. Plus some adjustments: 2 for using mass marketing or 4-6 for causing financial hardship (only one of these), 4 for being the leader of the organization.

The base for larceny is 6.

That gives 36 just based on the money, and up to 46. That's 15 years on the low end, and runs off the end of the table ("life") on the high.

In the federal system there is 15% time off for good behavior, so 15 years means 12.75 actually served.

I'm assuming here the counts run concurrently or group (which I think is more typical than sequential, and also gives lower numbers). The judge can depart from the guidelines and give a lower sentence but SBF is not in a good place right now.

https://www.ussc.gov/guidelines/2021-guidelines-manual-annot...

Is there going to be any reckoning for the VCs who poured money into this ridiculous business? I don’t see how you respect Sequoia’s judgement after this.

>I don’t see how you respect Sequoia’s judgement after this.

Me neither, sounds like that's the reckoning.

Helpfully, sequoia list who they are investing in, e.g.

https://www.sequoiacap.com/our-companies/?_categories=fintec...

https://www.sequoiacap.com/our-companies/?_categories=crypto

And of course you should all enjoy this while you can:

https://www.sequoiacap.com/companies/ftx/

It's hilarious how they describe the problem at FTX as a "liquidity crunch”. Liquidity was the least of their issues. What a bunch of clowns.

Not fair. They ran a "rigorous diligence process" at the time of their investment.

https://pbs.twimg.com/media/FhKq6zQUoAIUJ1W

These two sources claim Ramnik Arora played a "crucial role":

https://diyatvusa.com/2022/11/24/meet-ftx-insider-ramnik-aro...

https://podcasts.apple.com/us/podcast/who-is-ramnik-arora-th...

There is that Moonstone Bank thingie again: Ramnik was there too:

https://www.crunchbase.com/person/ramnik-arora

https://www.crunchbase.com/organization/moonstone-bank

Fluent Finance & Moonstone Bank issue "US+ Stable Coin":

https://www.globenewswire.com/en/news-release/2022/10/24/254...

"Fluent Federation of Member Banks":

https://www.fluent.finance/

https://www.fluent.finance/team [includes the "inventor of CBDC" ..]

There are so many rabbit holes here. FTX is the tip of something bigger imo.

that is why VCs are diversified

I don’t mean a financial reckoning, I mean a reputational one. Why would you want to do business with such foolish people?

It is an advantage because taking money from stupid people is preferred

> Why would you want to do business with such foolish people?

On the other hand, I kind of want to pitch something to them now.

> I don’t see how you respect Sequoia’s judgement after this.

Same for a16z, Softbank and all the others that jumped on the crypto bandwagon without doing their jobs as board members and during the run-up to the deal and after investing.

Ironically, the VCs will position themselves as the victims.

Did anyone respect SoftBank even before this? Their claim to fame was the botched WeWork money hole and a few other insanely overpriced rounds on unscalable/unprofitable(even in theory) businesses.

It's a mark of something, but not of excellence.

Yes. SoftBank has been extremely effective in the mobile telecommunications investment space. Look up Vodafone KK and their investment in Sprint.

SoftBank was SoftBank before its unprofitable/weird investments in businesses like WeWork and Boston Dynamics.

A16Z didn't invest in FTX

No, but they've been all over crypto:

https://a16zcrypto.com/

Let's not forget this gem https://archive.nytimes.com/dealbook.nytimes.com/2014/01/21/...

The juxtaposition of the headline with the items above it from the present is interesting.

Yes, but crypto didn’t steal billions of dollars. Individual companies did.

A lot of people are still reasonably very excited about Bitcoin and crypto.

A lot of people are un-reasonably excited about Bitcoin and crypto, in large part because VC backed companies are pushing the story that there is money to be made there.

A lot of those people will lose their savings and/or their shirts because they are not made aware of the fact that those companies are on the sell side. You can do your utmost best to try to separate that from 'Bitcoin and crypto' but to your average victim that doesn't really mean much.

I've used crypto, I think I understand the main limitations, have mined a single bitcoin back in the day when this was still possible on a GPU, received donations and made donations using bitcoin, in the end I see it is of limited usefulness, mostly related to when people are unbankable for a variety of reasons, but I do not buy the hype.

I'm just enjoying their humiliation and reputation hit. Enjoying only so much as it is the correct free market result of betting big without [edited] due diligence. Some of it is result of fed priming the economy with free money. With so much money being dropped from the helicopter there's no time for due diligence. You win some you lose some so in that sense it was a rational bet I guess but not an intelligent one.

On the one hand, sure, but on the other hand, this was literally a case of fraud. A fraudulent business is going to go out of its way to hide the fact that it's committing fraud.

You do know that due diligence involves going over financial records correct? I imagine they didn't look at anything given the sheet SBF was shopping during the collapse.

I agree that fraud trumps due diligence. You can do your diligence all you want but a fraudster can thing of a million ways to hide the truth, offer up forged/faked documents, etc. But due diligence is just that - you check out at least what is properly due - do they keep books, are they properly audited, do they have a proper board of directors, etc. It's evident Sequoia did none of that. SBF's balance sheet at the time this all thing went down was a spreadsheet that looked like it was made by a kid with no financial training which it was. Their corporate and financial controls were so lacking its insane that anyone gave them money. But Sequoia did and did so with what appears to be no substantive due diligence, other than being swept up by SBF saying exactly what they wanted to hear.

There's a level of wilful ignorance here. If you "invest" in a business because line goes up and you don't ask why or how, and it turns out the why and how was crime, well, maybe you were just a rube, but maybe you figured out that it wasn't in your interest to ask too many questions. When we're talking about a sophisticated top VC fund...

Serious question: If Binance knew something was up why didn’t Sequoia?

The Sequoia profile of SPF is quite the read: https://archive.ph/qFJJN

The podcast Behind the Bastards did an episode on SBF, it referenced this article! And made fun if it extensively

There was. They marked their entire investments to zero. A total loss.

Are people going to trust them with their money to let them raise future funds?

If so: why?

People will still trust them with their money because social accountability mechanisms are not that great, PR is a thing and people are even more prone to FOMO and skipping due diligence than even VC investors have been here.

What about the funds that FTX invested back into Sequoia?

Sounds like Sequoia has something to go after.

SBF invested 200 million back into Sequoia funds as an LP, wasn't that big of a loss as they invested 214 million into FTX

Wasn't it 500 million?

The reckoning perhaps is that as rates rise, investors will not need to resort to investing in "tech" companies.

The over-availablility of cheap capital was one factor leading to the rise of VC and BS "tech" companies, but the other factor was that rates were so ridiculously low for so long investors were essentially forced to invest in this speculative nonsense.

Sequoia's main driving factor was paranoia of missing the next big thing. Why would that change with one of their assets tanking? They went through similar (albeit at a smaller scale) many times. Most investments flop, this one very publicly. Still, just one of many investments they have, some of them equally foolish. Many "foolish" investments made them rich before.

The same reckoning a VC always gets for making a bad call: the money's gone.

Their money is gone. Their reputation is tarnished among founders and LPs alike for the next 2-3 years. The partners/analysts who were in awe of SBF have become a laughing stock. I'd say VCs have greatly suffered. But then they will brush it under the carpet in the pretext of "that's the risk we are willing to take while chasing 1000x returns" and I guess that's fair. They voted with their money and reputation and lost both.

Other than the reputational hit unless they knew about the embezzlement, what would it be? They probably didn't know what was going on, either. They had their ill-timed puff piece a few months back, and they make money on exits. No way FTX would have made it to the public markets once auditors saw it.

> "did transmit and cause to be transmitted by wire, radio, and television communication"

Note to self: Remember to use only free-space lightwave communications to avoid committing wire fraud.

Edit: Removed "fiber" because it looks too much like a wire and avoid being busted by outside1234!

That's considered "a wire" by the law now :)

Curses! Foiled again!

Does it help that I've now removed the fiber?

Odds are the legal system will converge on a non-technical, highly abstract meaning of "wire" to the effect of "any medium for conveyance of a signal over long distances (where long distances can reasonably be concluded to encompass multiple jurisdictions).

This is why Legalese and English are truly seperate beasts linguistically.

Alas, it looks like I'll have to use my Maxwellian knowledge for good rather than evil after all.

Aren't light waves and radio waves the same phenomenon at different wavelengths?

Of course, but the fact that they redundantly spell out "radio" and "television" (as though they aren't the same) makes me think we have a good chance of convincing a jury that "light" is something completely different.

And the prosecution will spend an entire day trotting out some physicist in front of the jury saying why light and radio are the same thing. I’d love to hear the defense question the physicist about why they are wrong

I think the defense would handle that pretty easily. Question the physicist until things are confusing, get him to repeatedly state that he is not an expert on the law or legal definitions (he is a physicist) and leave the jury thinking "Well, I didn't understand that guy, I'm sure it was some physics thing, but doesn't apply to the law."

radio is a narrow range of frequencies of light; a subset of light. there's a technicality in there that could still work.

Carrier pigeons should still work.

Then you have to worry about falcons, or Blackadder. Smoke signs, maybe... but then you have to worry about the weather and wild fires... Seems they thought that one through!

What about flag signaling? Asking for a friend.

Ok as long as you don't use a halyard, since rope could be considered wire.

Pigeons would probably fall under `mail fraud`.

If the laws of USPS made during 1800s pigeon mail carrier are still on the book, then yeah, mail fraud.

RFC-1149 is the only safe way to commit fraud.

https://www.rfc-editor.org/rfc/rfc1149

Unless some stool pigeon testifies against you.

That's when you call in some Goodfeathers [0] to make the problem go away

[0]: https://www.youtube.com/watch?v=QZPwdGbxwNU

Make sure you set the evil bit to true too.

https://www.rfc-editor.org/rfc/rfc3514

The fact that they named the chat group channel for their executives (SBF, Caroline, others) "Wirefraud" is jawdropping.

Tell me they didn't...

They did, Caroline also made a Tumblr post that said something like, "When I add being feminine to my dating profile should I put it before or after the section on wire fraud?"

I refuse to believe this. No one uses Tumblr.

it works better than twitter

SBF denied it but the Guardian picked it up. No idea if it's true.

https://www.theguardian.com/business/2022/dec/13/sam-bankman...

https://archive.ph/fUnp3

did transmit and cause to be transmitted

I often wonder why lawyers cling to this archaic form of verbiage, when they could just write 'transmitted, and had others others transmit [...]'.

"The device transmitted on its own, my client didn't cause the transmission."

They could make that argument anyway. The semantic content is identical.

I assume if your trying to prove someone violated a law, it makes sense to use the exact phrasing in the law, rather then paraphrase and leave the defense some possible semantic wiggle room.

I'm a civil lawyer, not criminal, but maybe a criminal lawyer can chime in. Don't they have to allege specific facts in an indictment? If I were served with this as a civil complaint, it would be deficient on its face.

Also a civil lawyer so not certain but I know there's a saying: "you can indict a ham sandwich," meaning the standard is very low.

This is just the Federal grand jury indictment.

See https://www.justice.gov/usao/justice-101/charging

It is a pretty typical indictment, fact wise. They don't often include the level of line by line detail you would find in a civil complaint. They mainly exist to let you know what you are being charged with, not to make the case to you that you are guilty.

Civil complaints are also deliberately meant to be detailed enough that people try to settle them ahead of time, pre discovery.

If you looked at non grand jury state proceedings, the criminal complaint would look closer in detail to a civil one.

Though I believe they have to extradite here so you will likely see a more detailed version that ends up in Bahamas court, depending on what they/the treaty requires

Is there a reason why they did this before and not after he appeared in the previously upcoming congressional hearing?

A good question. Rep Ocasio-Cortez, questioning the current CEO of FTX in committee, seemed to suggest that there was more going on behind the scenes than was admitted to in the firm's legal filings of yesterday. I haven't been following the case closely so I'm not sure what her line of inquiry was aimed at.

I've seen a bunch of his interviews now and his message is pretty controlled, actually. It all boils down to: (a) I don't know, wasn't aware, and (b) I messed up / lost focus. These appearances seem to play a therapeutic (instead of legal or financial) role for SBF (bad idea, obviously). Yesterday (12/12) he was still talking about returning in a "senior executive role" to help in the bankruptcy. He is also convinced FTX USA and FTX Japan were fully solvent and that they still have a future. Fascinating.

Every indication is that he's lying through his teeth about being unaware.

“If you attract customers and investors by saying that you have good risk management, and then you lose their money, and then you say ‘oh sorry we had bad risk management,’ that is not a defense against fraud charges! That is a confession!”

https://www.bloomberg.com/opinion/articles/2022-12-13/how-to...

Levine, as always, trotting out the bangers :)

Sounds like a sociopath.

It's interesting that the US gets priority on prosecution here when the losses internationally are far in excess of those of US creditors.

There's no "priority" at work. The DoJ just filed charges first. There's no reason any other jurisdiction couldn't file its own case simultaneously, though obviously they're unlikely to get him extradited while he's standing trial.

It’s the biggest economy and the strongest “rule of law” out of all the large countries in the world. And it has the most soft power in the world. I’m not too surprised

The United States Department of Justice effectively has a 99.6% conviction rate[0]. As the article states most of this comes from pleas but in cases like this (Theranos, etc) they'll go to trial and almost always be found guilty anyway. That's an impressive stat and they want to keep it. With a conviction rate like that an indictment is practically a guarantee that anyone named in it will go to prison.

They also have an incredible amount of law and leverage in their favor. For example, another tactic is using statutes like "false or misleading statements"[1]. As that article tells it they'll often navigate suspects towards making statements investigators know to be false and then come back at a later interview and let them know they already have them on something that can get them five years in prison. There have been famous examples of wealthy and sophisticated people (Martha Stewart, Dennis Hastert, etc) getting charged under that statute when all else fails. Basically, if they want to get you they will get you.

All of this is pretty well known and I'm not surprised in the least the rest of the world is happy to sit back and watch the DOJ "do what it does" and put people in prison.

[0] - https://www.doarlaw.com/blog/2021/04/what-you-should-know-ab...

[1] - https://www.iannfriedman.com/blog/2019/april/federal-charges...

The fact that SFB was still giving live interviews during the whole FTX collapse where he contradicted himself was beyond dumb. They are going to have a field day with him.

Was listening to C-SPAN, they said his written statement for the record of the hearing was very offensive. "I would like to state, under oath," and then two words they wouldn't repeat.

Doing a Google search of "SBF Fuck You" shows he's already told regulators and his lawyers to go F themselves, I'm guessing he said the same to the US Congress.

Maybe this guy isn't as smart as he thinks he is.

That's pretty obvious by now I think. Still, he makes just about every other thief look like a bumbling idiot.

it was "I fucked up"

https://www.forbes.com/sites/stevenehrlich/2022/12/13/exclus...

Forbes published it: https://www.forbes.com/sites/stevenehrlich/2022/12/13/exclus...

He said "I fucked up" which would get C-SPAN in trouble with the FCC.

It is a very defiant and entitled sounding statement though.

No it wouldn't. C-Span isn't broadcast for one thing, for a second it's newsworthy, and for a third they could just say/write 'I f**ed up'

The US is so babyish about this stuff. One day people shout about free speech absolutism, another day they hold mock fainting fits over common swear words that virtually everyone uses. In other countries this would not merit anything more than an arched eyebrow on the part of a newsreader.

The US, like the EU, isn’t a monoculture.

Then again, some people are hypocrites.

The US doesn’t have a monopoly on hypocrisy either.

You want room 12A, next door.

Hehe, nice one.

I came to realize this when the head of the school our son went to called me at home to say that my son had used an inappropriate word in school. He wouldn't say what the word was, even when prompted several times, as though he was unable to utter it. Then finally he resorted to spelling out 'f u c k', so I said 'Oh, you mean 'fuck'' and he nearly lost it. I explained to him that my son learned pretty much all of his slang from his schoolmates since he'd only been in the country less than a year so probably the problem was on his end and left it at that. He never did call again...

very true, but you guys share a common language, a foreign policy and some cultural artifacts like the shame of using some bad words. Fuck comes to mind but I'm honestly more disturb by the N word. Like y'all call it. At the same time, none of my business.

Forbes also published his hair on the cover [0] with glowing statements next to his own quote of saying he doesn't know anything about stuff. Along with Elizabeth Holmes. Both had VERY easily detectable scams for their bullshit.

[0] https://twitter.com/Mayhem4Markets/status/159174882554665779...

It's been a while since I've had a cable subscription but saying "fucked up" on cable was a common occurrence. CSPAN is a cable thing, not OTA.

Maybe not! There was that case in 2003 where Bono of U2 said “fucking brilliant” when accepting an award, and the FCC ruled that it was not a violation, because it was not in the context of intercourse. But then later reversed itself.

https://www.rcfp.org/fcc-commissioners-find-bono-remark-inde...

One certainly hopes that the thousands of customers whose funds he stole will also see him face charges for what he did to them.

I'll restrict my comment to condemning the empty cynicism behind Elon Musk's tweet [1] that, because SBF donated to Democrats, there would be no investigation of SBF, much less an indictment.

And AFAIK Elon Musk hasn't publicly admitted that he was wrong.

[1] https://nitter.net/elonmusk/status/1591822387267665921

Yeah, such a silly take to imagine that politicians would go down with a blatant fraudster like that just because he gave them a couple of mil for their candidacies. A big part of being a skillful politician is knowing not to tie yourself to corpses like SBF.

The opening phrase is killing me. What can "From at least in or about 2019" mean? Does it mean not before 2019? Does it mean 2019 at the latest?

It means that they have identified acts back to 2019 but are not foreclosing on finding more acts earlier.

That’s what “at least” means.

The “in or about” is separate, and means they found things that may have been in 2019 but are not foreclosing that those particular things may have occurred at a different time

oops, I didn't see your reply when I posted mine. yours is a clearer explanation.

Things that happened earlier than 2019 have dates less than 2019, no?

The law is definitely not a formal grammar like we have in computer languages, yes. :)

(not a lawyer)

there are two separate things here.

"on or about" (s/on/in, in this case) is an expression[0] that indicates an approximation. hedging in case it actually happened in, say, 2018 or 2020.

the "at least" is what you'd think, of course. combining the two in this way feels awkward, but it's common usage [1].

[0] https://www.nolo.com/dictionary/on-or-about-term.html

[1] https://www.google.com/search?q=%22at+least+on+or+about%22

At minimum roughly in 2019, but possibly earlier?

I think it means "we have evidences about his crimes in 2019, but we suspect he also commited some crimes earlier, and if we'd find additional information in due course, we reserve the right to add it to the charges" in legalspeak.

It prevents the defense from using the precise language as a technicality.

“You honor, my client is accused of crimes starting in 2019, but we intend to show that the fraud started in 2013. That is completely different crime which this case does not address. Motion to dismiss”

That probably wouldn’t work, but why take the risk?

IANAL, but I did serve on a criminal jury once. Not that it means much. When we got instructions for how to render a verdict, every charge was explained in plain English, maybe one or two sentences, and definitely included the date. It seems to be a technicality that matters, and someone could walk if the date is wrong.

That kind of phrasing is boilerplate for indictments. It's used even in the most nailed-down circumstances. Here's a bit from Zacarias Moussaoui's indictment for 9/11 [0]:

> On or about September 11, 2001, Saeed al-Ghamdi, Ahmed al-Nami, Ahmed al-Haznawi, and Ziad Jarrah hijacked United Airlines Flight 93, a Boeing 757, which had departed from Newark, New Jersey bound for San Francisco at approximately 8:00 a.m. After resistance by the passengers, Flight 93 crashed in Somerset County, Pennsylvania at approximately 10:10 a.m., killing all on board.

I mean, if they're being careful about the date of that, they'll do it for all dates. (Curiously, though, the very next paragraph in that indictment doesn't use the "on or about" qualifier.)

[0] https://www.justice.gov/archives/ag/indictment-zacarias-mous...

It’s beautiful seeing a justice system work so quickly

SBF is no Muhammad Ali.

How anyone could look at this man's behavior over the last few weeks and not think he was on a fast track to a federal penitentiary is beyond me.

A word to the unwise: If you have done something, anything, that you have a credible reason to believe the United States government thinks is illegal, shut up. Do not do any of the following:

* Go on a podcast and talk about it

* Go on a Twitter livestream and talk about it

* Tweet about it

* Answer questions from those you committed the crime against about it

* Speak to journalists about it

Instead, shut up. Shut up shut up shut up shut up. Your defense attorneys and your ankle will thank you.

It does not matter whether it was an honest mistake or not. It does not matter whether you agree, philosophically, that it ought to be illegal. It does not matter whether Congress wants to talk to you about it first. It doesn't matter whether you've lived a life so sheltered and privileged that you cannot conceive of the idea that anyone from the government might be out to get you.

Imagine the US Justice Department as an extremely patient, extremely hungry predator, and yourself as a delicious, plump prey animal with two broken legs hiding behind a rock. Anything you do or say to anybody except your lawyer will be used against you. So shut up.

It's often arrogance that leads to these things. I have a feeling he thought that the "aw shucks, I didn't know what was happening and I want to make things right" shtick would somehow work. He seems like a pretty dumb guy.

I don't pity SBF, but this advice is important for innocent citizens. It's unfortunate that anything you say to law enforcement can be used against you - but none of it can be used for you. A police officer can testify against you, but if they try to support you it will be dismissed as "hearsay".

https://m.youtube.com/watch?v=d-7o9xYp7eE

obligatory “don’t talk to the police” link.

I'm impressed it took a whole 33 minutes for this to be linked!

I'm surprised this classic video is 10+ years old but has only 18M views.

edit: Saw that the professor, James Duane [0], has his own Wikipedia page, almost entirely on the popularity of the Youtube lecture. Even more surprising, his Talk page seems to be free of debate over Duane's notability. Pretty impressive for a single videoed lecture!

[0] https://en.wikipedia.org/wiki/James_Duane_(professor)

Should be shown in elementary schools as part of the curriculum.

But then youd be disrupting the school-to-prison pipeline![1]

[1] https://en.m.wikipedia.org/wiki/School-to-prison_pipeline

I was shown it in high-school by a particularly good social studies teacher.

Yes but they always miss Part 2 :-)

"Don't Talk to the Police Part 2" - https://youtu.be/tIt-l2YmH8M

It all depends. For a speeding ticket, giving your info to the police tends to make it easier, although you do not have to answer his questions.

The lawyer mentions this in his talk.

Lawyer here. I give this guy’s book out to anyone I care about. Friends, family. I even highlight the bit at the end with the practical advice. Everyone needs to know this.

The friendliest police officer in the world is not your friend

OTOH, as a former public defender I have no problems talking with the police.

The police aren't your friend. They're also not your enemy.

Talking to the police as part of an investigation doesn't make you a suspect. Seriously, how do people think criminal investigations are done? Talking to witnesses is a huge part of investigating. People very rarely finger themselves as potential suspects; it's almost always the other witnesses who identify them as suspects.

If you're worried that you've done something wrong, talk to a lawyer first. 99.9% of the time, they'll tell you it's fine. Of course, if you tell the police you need to talk to your lawyer first, they'll want to know why you think you need a lawyer; if I were your lawyer, that's the first thing I'd wonder too. And if you weren't considered a potential suspect before you definitely will be on their short list after.

I can see why someone familiar with the law would be comfortable speaking with the police, but it's tough for a lay person to know if they are being lied to or will inadvertantly say something seemingly benign that causes them grief. Given that police are allowed to lie with impunity and might become your enemy, it's almost all downside for oneself to speak to them.

If cops were obligated to be honest in more respects I would be more willing to open up, but of course they don't want any restrictions in that area. Cops in the US want to be able to lie whenever it's convenient and also have everyone trust them, but that's not a very fair bargain for the general public.

If the police are asking you questions, they're not lying to you...they're just asking questions.

And if the police say something seemingly benign that causes you grief, you can look forward to a large-ish settlement to make up for your troubles.

People on HN rarely interact with the police and it seems they have an unrealistic, media-driven perception of how cops actually act. For point of reference, it's the same as how non-techies assume that every tech employee can hack their way into a bank account or rig together a go-kart from spare parts.

they’re not .. not lying to you, either. Maybe!

https://reischlawfirm.com/police-allowed-to-lie/

That's mostly FUD from a criminal defense firm trying to scare people into hiring them.

Cops are not as bad as people think they are. Cops behaving badly (in the U.S.) is news because it is the exception and not the norm.

~30% of wrongful convictions is just rounding error, right?

https://www.law.umich.edu/special/exoneration/Pages/detailli...

Read your own source. Because, by your logic, SBF being a con artist means that all programmers are con artists.

30% These convictions aren't the result of people talking to the police and then getting screwed over. The overwhelming majority of them are the result of cross-racial witness identifications.

To put it bluntly: most wrongful convictions are due to racism on the part of prosecution witnesses.

If an officer testified in support of you about what he witnessed, why would that be hearsay?

If you tell a police officer that you did a crime, then your words are admissible as evidence against you. If you tell a police officer that you did not commit a crime, you can't have the police officer testify in your defense that you told him that you did not commit the crime.

Witnessing things is a completely different matter.

Ehhh that's still misleading. It makes it sound like when the officer testifies about your statements, it goes through a magical filter in which only the inculpatory(is that the word?) stuff can come in, but not the exculpatory. Like...

During Mirandized interrogation:

Doe: "I grabbed her wrists after she picked up a knife to attack me."

In court:

Prosecutor: "What, if anything, did you learn from questioning Mr. Doe?"

Officer: "He said he grabbed her wrists."

Defense attorney on cross-examination: "In what context did Mr. Doe grab her wrists?"

Officer: "After she picked up a kni--"

Prosecutor: "Objection! Hearsay!"

Judge: "Sustained. Jury will disregard anything about the accuser picking up a knife. Wrist grabbing stuff is fine."

^Not remotely how it works, at all, but what you might falsely believe from being told "your words are admissible against you, not for you".

"If you tell a police officer that you did a crime, then your words are admissible as evidence against you."

This is because the people who wrote the evidence rules believe nobody would admit to a crime unless they are guilty. So it's a hearsay exception.

The exception isn't meant to be a sinister trick to treat you unfairly, it's meant to lead to the right people going to jail and the right people not going to jail.

Talking to the "regular" police and talking to a federal investigator are two completely different things. At the federal level they have "false or misleading statements"[0] which is a felony with a five year max. People have been convicted and done prison time on this alone based on nothing other than the notes and testimony from a federal investigator. At the state level probably the best they have is "obstruction of justice"[1] which requires things like physically interfering with the police or destroying evidence and even those actions have lesser penalties than "false or misleading statements".

I have a friend who is a federal criminal investigator and his advice when/if the feds show up is to say nothing other than "Do you have a business card? Someone will be in touch." and get a lawyer ASAP.

[0] - https://www.iannfriedman.com/blog/2019/april/federal-charges...

[1] - https://www.pallegarlawfirm.com/obstructing-justice-in-flori...

Because hearsay is an out-of-court statement, but there are exceptions, including a statement against the person's interest. FRE 804(b)(3).*

In other words, if you try to introduce an out-of-court statement that supports your case, it's hearsay; if the statement is against your interest, it's allowable.

Of course there are other exceptions and nuances, but this is the jist of it.

* https://www.rulesofevidence.org/article-viii/rule-804/

At first, that sounds weird. Then I read the link you've provided. Now I understand how it makes perfect sense. Thanks for the explainer.

But it’s not like that acts as a filter against anything in your interest, since it would still come out on cross, right? I tried to illustrate with my comment here:

https://news.ycombinator.com/item?id=33973220

IANAL.

But it's unlikely the Police officer actually "witnessed" anything that'll help you.

If you tell police officer you did something bad, it's essentially a confession and reported as such.

If you tell police officer you did something good, it's hearsay - you told it to officer who told it to judge & jury.

Then there's jurisdictional details as to their role and rules of evidence etc that will vary from country to country.

But it's a shocking revelation to most people that Police cannot effectively help you in court. That's not their role.

-----------------------

Edit: Found it - federal rule of evidence 801(d)(2)(a) - Opposing Party Statement

https://www.uscourts.gov/sites/default/files/federal_rules_o...

Also if a cop lies hard to say who is right. But if you never talked to a cop unless your lawyer was present with recording equipment, etc. well, that’s a much more solid defense.

There are plenty of exceptions to the hearsay rule, though; there are also times when something that seems like it’s hearsay isn’t. Exception: maybe you made the statement to the cop while you were covered in blood and blubbering about something you had witnessed, making it an excited utterance. Or maybe your lawyer is eliciting the statement from the cop not to suggest to the jury that it’s true, but to show you had no motive, making it fall outside of the hearsay rule.

Police have a responsibility to testify truthfully under oath, within the constraints of the rules on hearsay. But that doesn’t mean they are forbidden from saying anything in your favor, no matter what.

It's hearsay 101 - an out of court statement by someone who didn't say it, being offered for the truth of the statement. it's not hearsay when you say it to the officer because that is a party admission.

There are times when it doesn’t apply. But yes, for most people in most situations, as most of us know, you don’t talk. It’s called the fifth amendment. School children learn about it in civics class.

Do we even have civics in most schools anymore?

Yes.

Let me guess: you live in the suburbs, or your kids go to a private school, or you are relying on your past.

I live in Illinois, where it's a statewide requirement for graduation.

> It's unfortunate that anything you say to law enforcement can be used against you - but none of it can be used for you.

Is it really unfortunate? There is simply an implicit assumption that humans avoid incriminating themselves when possible but are very quick to offer excuses. That seems to align pretty well with my experience. Therefore, we assume that if someone says something contrary to their own interest is is more likely to be true.

>Is it really unfortunate?

Yes; the system should not be biased towards guilt.

This is arguably biased towards justice, not guilt.

"It is better that ten guilty persons escape than that one innocent suffer."[0]

[0] https://en.wikipedia.org/wiki/Blackstone%27s_ratio

Because one is hearsay and one is a party admission. This is basic evidence law.

He didn’t speak to the police though. Just to randos with podcasts in the crypto sphere

Today there was an article about his parents in nytimes. I think at at least one of them is professor of law. And both parents seems to be involved with his company. I wonder if he didnt get any advice from them about not talking?! Maybe he knew that he is done legally and there is no downside to talking to public.

There's a pathology amongst wealthy people where they think that the law doesn't apply to them, period, and are simply shocked when it does.

Some other recent examples of this include the lawyer Michael Avenatti going to jail for decades for stealing from his clients, and everything that has ever happened to Donald Trump.

(In my experience as a white person it is mostly other white people who think this, but I don't want to generalize.)

I would argue they have this belief because it is so often true. Exceptions are surprising to many people.

It's true to an extent. It's rarely true to the extent they imagine.

> (In my experience as a white person it is mostly other white people who think this, but I don't want to generalize.)

How to casually stereotype without stereotyping?

Wealthy is subjective, I know, and here, on HN, it's certainly more subjective than most places, but are Stanford professors really consider wealthy? By northern california standards?

Check this out https://en.wikipedia.org/wiki/Corruption_Perceptions_Index

> How anyone could look at this man's behavior over the last few weeks and not think he was on a fast track to a federal penitentiary is beyond me

Seeing how thoroughly he convinced people that he had political influence, and given his general lack of awareness, I’m willing to give merit to his believing he was immune. Similar to how people outside securities think insider trading is more rampant than it is, insider trade in the most obnoxiously obvious way, and then promptly get caught.

Oh, I believe he believed it. I just can't imagine an impartial observer from outside his lil universe believing it.

I think this is a bit far fetched. He was the scion of famous law professors. He grew up around the law. To think he didn’t understand what the general public does about the law takes a special kind of … assumption that directly contradicts the obvious facts. He very likely knows more about the law than anyone on here. How could he not?

> He very likely knows more about the law than anyone on here. How could he not?

There are actual lawyers on HN. I don't think proximity to lawyers makes one as knowledgeable as an actual one.

Lawyer up and shut up is the most basic advice. Ever.

I know a dev who is married to a lawyer. He knows enough not to offer an opinion.

My father is a civil engineer. That doesn't qualify me to build a bridge.

Sure. But you probably know a few basics about bridges. That’s the overarching point - a basic lawyer thing is if you are ever in trouble, don’t talk to anyone: cops, media, etc. so it’s curious why he decided to anyway.

The easy answer is that he was zooted to the gills on ADHD meds. There might be others too.

TBH, a little knowledge is worse than no knowledge. Fewer chances to overestimate your own understanding in the later case.

I think you meant to say "That’s the overarching pont".

Now that pun is going too far.

don't worry, we'll cross that off when we get to it.

Has anybody seen any evidence whatsoever from SBF in any of his dealings at FTX or any of his dealings in the downfall of FTX that evinces any sort of legal savvy whatsoever? My parents are musicians. I'm not.

My father sold cars most of his adult life, and certainly throughout all the time we shared together until his death. He was very good at it. And yet I know fuck all about selling cars or cars in general. Nada. Nothing. I didn't even learn to drive until I was in my thirties. "X's parents are in profession Y" hardly means anything.

Not even “here’s how to negotiate and get a good deal on a used car”? Sorry to hear, that’s the kind of stuff a parent should pass on if they know.

Your theory of the genetic transmission of legal knowledge is an interesting one. We await your research for further study.

I don’t think the poster is proposing genetic transmission. Rather it’s fairly common for parents to share “insider knowledge” they have with their kids to help them be successful. But this does not always happen.

Mind the old aphorism: >The Cobblers kids have no shoes.

Not everyone brings work home with them, or forces their kids down that path.

> He very likely knows more about the law than anyone on here. How could he not?

The answer is simple, through a lack of knowledge. Knowledge of the law is not genetically inherited.

> How could he not?

Well, he’s not a lawyer, for one…

If he's committed crimes, he almost certainly doesn't listen to his parents, since lawyers by training are risk adverse, and tend to tell you not to do things that can land you in jail.

So if you believe he's committed crimes, then it doesn't become far fetched to imagine that he'd continue to not listen to his parents on matters of criminal defense.

The work of a famous law professor is very different from the work of a defense lawyer, and generally involves very little interaction with the business end of the justice system.

> He very likely knows more about the law than anyone on here. How could he not?

Lawyers and judges break the law, sometimes intentionally out of arrogance derived from how adeptly they believe they can skirt it because of their knowledge and position.

>Seeing how thoroughly he convinced people that he had political influence

We’ve gotten tot he point where we’ve gone way too far off the deep end when it comes to this narrative around political influence. the collective imagination seems to have risen to comic book level proportions.

All people saw was SBF gave a bunch of money and thought, “he must have a ton of influence”. Meanwhile, in my state, he gave $11 million to a democratic candidate who lost in the primary and was transparently an absolute joke of a candidate.

His donations to Democrats accounted for 0.025% of all the money Democrats spent on the midterm election last month. Anyone who genuinely believed that can buy you a get out of jail free card for billions of dollars in fraud should seriously re-evaluate how they think the world works.

I almost called BS on your statistic, but a simple Google search shows that this year's midterm elections saw spending of up to $16.7 billion [1], so it appears to be true. As a non-US citizen, the amount of money in US politics shreds my mind...what are they even spending it on? Ads? Campaign outreaches? How much do these things cost?

If it's how it is in my weird African country (Nigeria), I'll wager that most of the money is spent on advertisements and clueless campaign managers and staff enjoying the grift. But then, I understand; the U.S. is a really rich country with a high percentage of politically-active citizens, so they put their money where their mouth is.

1- https://www.cnbc.com/2022/11/03/2022-midterm-election-spendi...

It’s important to keep in mind how much more expensive it is to buy ads in major US media markets. It’s not difficult to spend tens of millions of dollars just buying television ads for a few weeks during campaign season.

Single ads are actually pretty cheap. Full campaigns that are designed to reduce or eliminate opportunities for your competitors to also advertise on the same station are expensive.

Mostly ads, there's a lot of staff too, but the typical campaign salary is pretty paltry and reporting laws limit opportunities for grift.

Consumerism. If you don't roll out a full blown corporate propaganda machine you aren't going anywhere.

You're not wrong, but on the other hand... the limit on direct contributions to federal campaigns is $5800. I can tell you from personal experience that this is enough to get a meeting with any senator or congressman except the most senior leadership (their price is about 10x more). So for about $3-4M/yr you can have every incumbent senator and representative on speed dial. They won't necessarily do your bidding, but they will return your calls.

Is this really true? How does it actually work? You donate $5800 then give them a call and ask for a meeting? I assumed that would take a lot more.

If you give them $5800 they will start calling you to ask for more money. If it's a Congressman they will usually call you themselves. If it's a Senator they might call you personally, or they might have their campaign manager call. But from there it's pretty easy to get a meeting if you want one.

You don't even have to give $5800 in most cases. $1k is plenty to get the attention of junior congressmen and even some less well known senators.

Just to put all this in perspective, it's actually possible to get meetings with these people without giving them money, especially if you're a constituent. But the more money you give, the higher you move up in the priority queue, and it doesn't take much to move to the front of the line.

Just seconding everything you are saying. We dabbled in political contributions at my workplace for a project and it was easy to get a meeting with just about anyone (except our Senators who we didn't need to try) as long as we were flexible with scheduling.

It’s also important to note that a part of a politicians job is to meet with constituents, so getting a meeting is not per se nefarious. The issue is about how much more access you get if you are a big donor.

That's right. Also worth noting that if you want to influence policy (as opposed to getting personal favors) it is quite effective to call their office and speak to staffer, or write a letter. Every call and letter is assumed to represent the views of hundreds of people who couldn't be bothered to call or write. You don't have to be long-winded because the only result of your action will be that a staffer puts a tally mark on a sheet of paper, but the results of those tallies can occasionally move the needle on votes.

They will contact you.

He donated almost 1bn - that is known of. The Democrats spent about 5bn in the whole election. Do you have a source for your numbers?

Are you counting PACs?

What’s your source for the $1bn?

Axios wrote that he spent $37 million on the midterms:

https://www.axios.com/2022/11/15/ftz-crypto-bankman-fried-de...

I think that given SBF’s assertion that he donated an equal amount of dark money to Republicans, it would be wise to mention the amount of money they spent as well. Otherwise you risk giving the impression that this problem is limited to a single party.

https://www.theguardian.com/technology/2022/nov/30/ftx-billi...

I also think the 1 billion figure is inaccurate. In May, SBF said that he could spend a billion between now and 2024. However, he backed away from that quote in October:

https://www.cnbc.com/2022/10/14/sam-bankman-fried-backtracks...

Elon Musk later said that SBF “probably” donated over 1 billion, without providing any supporting evidence. I can’t prove that he’s thinking of the May statement but it seems plausible if not certain. Either way, Elon Musk’s guesses are not proof of anything.

I’m glad you asked for sources. It’s always important to provide them.

Can all the people who claimed SBF would never be arrested because of the corruption of media, establishment and Democrats please ask themselves how many other false things they believe because of their tribe's ideology?

No, because there's always another theory that you can jump to when your prior assumptions fail you.

Here's an easy one: "He was only arrested because he was going to reveal damning truth in today's Congressional hearing."

Even if the DOJ, Congress, and SBF all swear until they are black and blue that it wasn't the reason for the timing of the arrest, the theory can change to "Of course they would say that, they are all in on the deep state conspiracy."

The beautiful thing about the world is that there is an unlimited number of unconfirmable and unrefutable possibilities and could-have-beens that can be used to support any idea - sensible, or silly.

Surely a meager bit of attention paid to fear/disgust-based politics [now don't project here folks ;)], would dissuade you from that notion. There's always a deeper conspiracy to double down with. Or outright lies. Gish galloping, etc.

He was the #2 donor behind Soros to Democratic candidates. It's not every day that the number two gets indicted for a multi-billion dollar fraud. It is good to see questions around influence arise.

Questions around influence are good, but what I’m referring to is different.

There were numerous posts on this forum who were adamant that nothing would happen to SBF because they were certain that he had the Democratic Party bought and paid for. It’s the certainty that I’m calling out here (“comic book level), not the skepticism.

> It is good to see questions around influence arise.

If he hadn't gotten indicted in, like, a couple of years, then sure. But people were assuming he wouldn't be indicted days after FTX collapsed.

This is accurate for non-dark money.

Interestingly, if we take SBF at his word that he donated equally to Republicans in dark money, he would be the fifth largest donor to Republican candidates.

https://thehill.com/business-a-lobbying/3720141-here-are-the...

Why on earth would you believe anything he says without evidence?

> We’ve gotten tot he point where we’ve gone way too far off the deep end when it comes to this narrative around political influence. the collective imagination seems to have risen to comic book level proportions.

Seriously. If I had a nickel for every time someone had posted on HN "SBF is immune because he donated a lot of money to Democrats" I'd have… well, a lot of nickels.

Madoff donated a lot of money to Democrats too and it didn't help him one bit.

What's particularly stupid is most of the time that people are going off about how some company or person gave a bunch of money and that is obviously why Congress passed the bill that company or person supported, the companies or people that opposed the bill also gave a ton of money to the same members of Congress that the first company or person did.

Also, often those companies on both sides of the bill donated a lot to the members of Congress that supported the bill and those that opposed the bill.

So why do they donate all that money?

Reminds me of someone or other who committed voting fraud, to prove that it's easy to get away with committing voting fraud, and immediately got caught.

Do we have some examples of people who have amassed great real or perceived fortunes (and power) that have not become drunk on it?

Musk on stage with Chapelle last night, Elizabeth Holmes, or SBF’s whole schtick, who are the ones who have kept their feet on the ground?

What are the attributes of these others who don’t lose themselves in fawning attention and (sometimes short-lived) mountains of capital?

See some videos on YouTube of Warren Buffet and Charlie Munger conducting Berkshire's annual shareholder meetings. It will help.

Quick link to 2022: https://m.youtube.com/watch?v=E_seuUbfUGw

Although I get the impression a large part of Buffet's normalcy is because he's chosen to spend his time making money for other people.

If you're ridiculously rich... you could do worse than thinking of common people as your boss, for perspective.

Some possibilities are Warren Buffet, Jeff Bezos and Bill Gates ex-wives (though, maybe they don’t count as amasssing their fortunes), um…

Rockefeller avoided the press entirely (to his detriment really) until well after he'd retired.

Jeff Bezos: Hey MacKenzie, let's quit our great jobs at DE Shaw, move across the country to Seattle, and start an online bookstore! [In 1994!]

By saying yes, she was, in effect, Amazon's first investor, and worked there in the early days. The value of positive support from family cannot be underestimated (see also Jeff Bezos' parents' early investment in the company).

I can well imagine there being a selection bias towards the ones who want to build a cult of personality being the only ones that "make news".

While not popular here, I would say Bezos has done a relatively good job of keeping his head amongst madness.

It IS pretty damning that Bezos (and Gates IMO) are the ones held up as "not letting the wealth and power change you". Bezos literally flew in a giant cock-rocket wearing a cowboy hat.

Sure that is great comedy fodder, but it isn't really at the same level of the others.

The popular wisdom is Amazon got into the video business entirely so Bezos could get dates with more actresses.

That may be a popular wisdom but it doesn't make sense. You really think a multi-billionaire who is moderately good-looking couldn't get a date? With literally anyone?

I would argue most do especially those who accrue it over time. Most power isn't in the broad open nor does attract attention necessarily (unless thats where it draws its source of power). It's those who attain it (power/money) in very short order that have significant difficulty adjusting to their change in circumstances.

You are only pointing to the very few who couldn't handle it or are drawn to attention.

There are so many people who have obtained fortunes and not become drunk on that.

The person who built a liquor store and grew into 20 stores across the city. People who started consulting companies. That immigrant family who scraped and scraped for decades while living above their restaurant. The list is endless, especially compared to the much shorter list of crypto criminals who are drunk on their illusory power and fame, which seems to always disappear overnight.

Any fool can make a fortune; it takes a person of brains to hold onto it.

Liquor stores and consulting companies don't stack up to the “ great fortunes" gp was asking about.

That imaginary liquor store owner, even as an imaginary person, has more of a fortune than SBF at this point.

Except "great fortunes" isn't what gp wrote. GP wrote, "great real or perceived fortunes". Besides, how do you know what fortunes people have made with their liquor stores or consulting companies?

Ross Perot was a billionaire from consulting, before being a billionaire was a thing. Plus he was a genuinely good person.

Money really is wasted on some people

> There are so many people who have obtained fortunes and not become drunk on that.

Both my perception and my experience from knowing several extremely wealthy 'self-made' people is that the vast majority are fairly quiet, prudent, bright and hard-working people who've managed to make (mostly) good long-term decisions and continue doing so consistently over time. I suspect the "crazy, playboy billionaire" stereotype is based more on high-visibility outliers rather than the majority. Outlandish, eccentric and/or entitled behavior makes for good stories and click fodder while typical long-term value-building behaviors are pretty boring.

This is the central theme of the book "The Millionaire Next Door".

Warren Buffett might be one example

Warren Buffet? Maybe Bill Gates? Queen Elizabeth II?

I don't think QE2 amassed her wealth and power. She was, officially, given it by God.

Gates seems to be caught up in Epstein stuff. Maybe. So I’m not sure where he stands. He does know when to shut his pie hole though.

It runs in his family.

The only thing he has done that I am aware of is become Farmer Gates in the retirement years.

Yes, you've likely never heard of them: https://www.forbes.com/real-time-billionaires/

I have no clue who these people are:

Hank & Doug Meijer

Tom & Judy Love

Stewart & Lynda Resnick

Andrew & Peggy Cherng

In fact the list of ones I recognize is tiny compared to the whole list.

Some of them don't even have pictures, but they're all billionaires. And yes, I consider even a single billion to be a great, real fortune. Most people will never crack a million.

Elon on a comedian's show is not not having your feet on the ground...

You realize that he's not asking to go on the show, people are asking him to come on the show. Your questions should be directed at Dave Chappele.

If the comparison point is SBF, then pg exceeds this bar. He doesn’t flaunt it, but it’s there.

Power is hard to measure, but in this context it seems reasonable to include lots of founders in the list. The Collison brothers, sama, and Brian Armstrong, to name a few. They’re all in charge of fortunes that normal people can only dream of.

I don’t think any of them have made critical errors. And it’s arguable whether Musk has, but time will tell.

Probably the hundreds of billionaires you’ve never heard of.

Yeah, and he was also in a state where the same strategy kept working again and again, so he may have been convinced it's a fundamental aspect of reality.

Any time SBF ran into trouble, he could just raise another round of financing, or borrow against artificial valuations, or "smooth things over" with the right people.

Once that happens enough, I imagine a lot of people would start to feel some cosmic entitlement to it, like that's just how it is, the FTT tokens must be worth $24 each, it's only a matter of "getting liquidity"[1], you can always raise more money, you can always call in a favor, you can always borrow against what you think the assets are worth, there's no reason to hold customer assets in their original form.

Heck, even to the very last days, when his attorneys and CFO were telling him he had to declare bankruptcy, he adamantly insisted that new funding was just about to come through -- and even that he got the offer moments after declaring -- but, of course, he can't say who, or under what terms, even why they would invest. [2]

Personally, I always try to maintain a frame of "these good times don't have to last, they can go away at any moment, so make sure you're ready for if/when that happens". But maybe I'd falter too, in the same position.

[1] A frame even informed observers buy into! Earlier comment: https://news.ycombinator.com/item?id=33539326

[2] ctrl-f for "Mr. Bankman-Fried was also frustrated.": https://www.nytimes.com/2022/11/29/technology/sam-bankman-fr...

FWIW it's possible that SBF's post-FTX-bankruptcy actions and words created such a spectacle that federal regulators and investigators were spurred to hit him hard and fast. But all the key evidence cited* comes from what he either tweeted before the collapse, or presented in private to investors.

By comparison, Do Kwon has been relatively quiet but that didn't stop him from South Korea putting out an arrest warrant on him in September. But it seems he's still "free" b/c he spent his time hiding his whereabouts.

* (at least in the SEC civil lawsuit)

People keep saying this, but honestly, does anyone really think it makes one iota of difference?

Fact is that there is a huge paper trail of SBF's malfeasance, nevermind the fact that his co-conspirators appear to be turning against him. If anything, his interviews seemed to be his attempt to argue for negligence over malice in his case.

Yes, SBF is going to prison for a long time. No, I don't think anyone has made a viable argument that his interviews over the past few weeks are likely to make his sentence worse.

Hard to say how much difference it would make but why would you give your opponent a freebie?

I think it does make a difference. It's effectively taunting the prosecutors, who will find ways to retaliate. So prison time either way, but likely more than if he had shut up.

Point is, there might be enough dirt to convict him without him talking, but there can't be any less with him talking.

Yes it has made a difference. In white-collar crimes, prosecutors have to prove intent. That means they have to somehow find evidence that the defendant meant to do various things improperly. SBF has literally given interviews where he has stated the required intent for some of the crimes.

As an unrelated aside, note that this is also a way of punishing lower classes of people more severely. If you shoplift, prosecutors don't have to prove you meant to do that rather than just accidentally failing to pay. Generally laws for intent are for people that legislators can identify with, and there is no intent requirement for people legislators don't personally identify with.

intent matter for a lot of crimes across the board

> SBF has literally given interviews where he has stated the required intent for some of the crimes.

Do you have examples of what you are referring to? As you say, intent matters here. The vast majority of quotes I've seen from his interviews are along the lines of "I suck at accounting", but that he didn't intend to steal funds.

But again, the other reason I don't think it matters is that there were plenty of other recorded examples that do show intent, e.g. cases where SBF was lying on Twitter specifically to try to cover his tracks: https://news.ycombinator.com/item?id=33632472

At least under CA law they do have to prove intent for shoplifting.

>Shoplifting is defined as entering a commercial establishment with an intent to commit larceny while it's open during regular business hours and the value of the property taken, or intended to be taken, is $950 or less. Any other entry into a commercial business with intent to commit larceny is burglary.

It does. His tweets were in the SEC's complaints this morning. Tweets AFTER the collapse.

Yes - he easily could've spent a decade out of jail - possibly with quite a lavish life - and ended up serving much less jail time.

So - on basically every account - he would've been far, far better off to STFU.

No kidding. If my business had lost billions of dollars belonging to other people, I would only be talking to a small army of lawyers. This guy acted like he had a deathwish.

SBF is quite obviously on the spectrum and I think that has a lot to do with his inability to use "No comment".

> SBF is quite obviously on the spectrum and I think that has a lot to do with his inability to use "No comment".

He may be, but going for the Lauri Love defense as your 'hail mary' may have been his only move left; they'll likely claim that this will be clear indication of his mental state in order to to get a lighter sentence or end up in a white-collar prison rather than a stint in Chino.

SBF's mother and father are both Standford law professors - so he knows all this.

He has another angle. Maybe he was trying to taint the jury pool. He was up to something, but what?

Judge people by their observed behaviors, not what you assume they should know. Lots of people should be smart and should act more intelligently than they do.

There are many accounts of SBF's capacity for subterfuge. I don't believe he was blabbing about what he did because he's stupid.

You can be a smart crook and still be stupid enough to do stupid things. Especially if you think you are smart enough to get away with it.

Parents also not out of the woods.

"The FTX founder Sam Bankman-Fried’s mother and father, who teach at Stanford Law School, are under scrutiny for their connections to their son’s crypto business." - https://www.nytimes.com/2022/12/12/technology/sbf-parents-ft...

I'm beginning to suspect this story is deeper than it looks.

I beg to differ. By all means, keep talking!

I just don't follow my own advice I give to criminals like SBF.

No, no, let him talk.

I don't think it would have made much of a difference either way. The feds did their own investigation and would have arrived at the same conclusions anyway

But, he has a savior complex... And you should too!

Last interview. Some pressure applied here... https://unusualwhales.com/sbf-interview

In this last interview, he talks about how several customers had negative balances on the platform due to margin trading. According to the SEC's civil suit, the only customer that had a negative balance was Alameda.

They blatantly were doing all sorts of illegal stuff with Alameda-they had god-mode (no liqs) and probably could see and snipe other peoples stops.

Source?

Not a lawyer neither, but in the leaked testemony of his to congress, he states multiple times that he didn't want to file for Chaoter 11 and even ordered people not to. Sounds a little bit incriminating, postponing Chapter 11, insolvency proceedings and all that.

Seems he really cannot shut up...

Or he didn't want to file for Chapter 11 because he is obsessed with being in the limelight. That would also explain why he can't shut up.

Either way, this whole story deserves a book, a film and a ton of popcorn.

It’s common knowledge to keep your mouth shut at this point. You don’t need to have highly-regarded lawyers advising you to know this, but SBF had (at least) two: his parents, who were with him in the Bahamas.

Even if he was under a delusion that the rules wouldn’t apply to him, we can assume his parents would do everything in their power to reign him in if this was not some sort of strategy.

From what I understand of the interviews, he carefully avoided going into details, and instead used the opportunity to present himself as an “aw, shucks” borderline simpleton with a heart of gold who just got in over his head. He was going to be arrested either way, so how do you see this as not a carefully-planned attempt to improve his public image?

>You don’t need to have highly-regarded lawyers advising you to know this, but SBF had (at least) two: his parents, who were with him in the Bahamas.

My experience has been that working with family or very close friends often nullifies or severally weakens professional sensibilities. It would be very understandable and almost expected if his parents are too closely involved emotionally and financially to be objective in this situation, and even if they were, the parent-child relationship also affects how one takes advice.

I would never rely on a close family member for important legal services, it seems almost as bad an idea as relying on yourself for legal services.

SBF is a self entitled, privileged prick. He has no concept of infallibility. He is smart and rich so he thinks he will be given a pass

Ok, but can you please stop posting unsubstantive/flamey comments to HN? You've done that repeatedly, unfortunately.

You may not owe ex-billionaire fraud defendants better, but you owe this community better if you're participating in it. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.

Both of his parents are in law too. Like, you'd think he'd know enough to not say anything.

Obligatory: https://www.youtube.com/watch?v=sgWHrkDX35o

Donald Trump did exactly the opposite of your advice at every turn, yet remains free and unindicted. SBF’s main mistake seems to have been not cultivating political clout before committing fraud, not anything related to what he said or did.

Trump's corporations are indicted and he's banned from running charities in New York. He was also impeached twice, which is the same thing as being indicted (and convicted too).

> He was also impeached twice, which is the same thing as being indicted (and convicted too).

The Senate trial is the equivalent of conviction; the House impeachment trial is more the equivalent of a grand jury indictment (although a very politicized one). No US President has ever been convicted in the Senate trial, Trump included.

Trump was president. Not saying the POTUS is above the law, but it's a much more complicated & explosive situation for law enforcement. And his political clout & influence he used to commit said crimes in broad daylight is way more than some political donations.

Where do people who do these kind of crimes go when they're sent to jail? Like.. is there a jail for financial criminals? A place where you're not sharing a bunk with a serial killer but just a billion dollar fraudster?

Or are they usually put into the same place?

Minimum security prison, at least in the United States.

https://blog.globaltel.com/white-collar-prison/

I really don't get this either. The guy has got to have a whole legion of lawyers. How are they allowing him to still speak publicly? I'm not even important and I've been consoled by company lawyers to not talk about stuff just "just in case". Yet this guy is is involved in one of the most high profile cases of all time screaming from the mountaintops about it.

This whole FTX thing is very suspicious on all kinds of levels internally and externally. So many things about FTX don't make sense as presented.

He ignores the lawyers.

The strategy of ignoring advice from attorneys has "worked" for Trump and Musk. Welcome to the age of solipsistic anti-expertise, where cultivating your personal brand matters above all else. It seems like an inevitable condition of deep set post-reality. The interesting question is what develops next.

Fascism. Large flowery fascism.

I guess you guys are right. The return of "big men" aka dictators.

https://en.wikipedia.org/wiki/Big_man_%28political_science%2...

White-collar crime prosecutions are notoriously time-consuming to prepare, by those standards this was remarkably swift.

Tldr: Being stupid and naïve is not a good legal defense

Probably also shouldn’t go back and delete semi-incriminating tweets[0] and try to avoid bot detection by tweeting one letter at a time[1] to keep the overall count the same (supposedly)[2].

[0] https://protos.com/sam-bankman-fried-caught-deleting-more-tw...

[1] https://fortune.com/crypto/2022/11/14/sam-bankman-fried-cryp...

[2] https://old.reddit.com/r/CryptoCurrency/comments/ywz4j8/sam_...

> How anyone could look at this man's behavior over the last few weeks and not think he was on a fast track to a federal penitentiary is beyond me.

That was obvious, but some of us who have seen some version of this before have been saying he was going to end up in prison when he entered US political donating/purchasing influence since the beginning of 2022; it was clear where this was all going and the hope was that it would take down all the alt scams, but somehow despite not having any BTC it has taken down the entire cryptocurrency market for no discernible reason.

Its the epitome of contagion effect in practice; and while hindsight is 20/20 I fear that the greatest take away here will be missed because of the ire that has been fomented in the media: insiders will use anything to achieve their largess, that regulation is a loosely held panacea when said insiders use influence and resources to grift.

I think he will get a light sentence, relative to the amount of money that has been lost, like Elizabeth Holmes as he scammed a lot of big players/rich people but it will not be the 2 life sentences that Ross Ulbricht, and that is the real point: we have a multi-tiered judicial system with a very clearly established selective application of the Law.

The guy is a thief who defrauded millions. His hubris is what got him in this situation.

I generally agree with you, but if I had to steelman SBF's actions:

1. Prosecutors don't operate independently of the court of public opinion. They can throw the book at you (e.g. the George Floyd officers) or let you off easy (e.g. other officers who historically did similar things but did not face the same charges).

2. The current perception is that he committed fraud (like Madoff), and if convicted for that would likely go to prison for the rest of his life.

3. He's clearly not innocent of wrongdoing, and there's too many people involved who are cooperating with authorities, so just being quiet doesn't help him as much (in contrast to being found at a crime scene with no witnesses).

4. If he can get a conviction only of criminal negligence then perhaps he can get out of prison faster.

5. Thus perhaps if he can loudly admit to being a bumbling idiot and super negligent, it might sway the public opinion to criminal negligence instead of outright fraud.

Honestly though, I'm happy he talked more in this situation. We shouldn't decry people who acted horribly unethically digging their own legal grave.

Direct link to PDF without Javascript:

   curl -s https://www.docdroid.net/kxfZltq/unsealed-indictment-in-us-v-bankman-fried-22-cr-673-abrams-as-sam-bankman-fried-of-ftx-heads-to-sdny-echoes-of-onecoin-and-un-bribery-cases-pdf \
   |tr -d '\134'|sed -n 's/u0026/\&/g;s/.*\"application\/pdf\",\"uri\":\"//;s/\".*//;/https:/p'

Q+D script using curl to download from "DocDroid"

   #!/bin/sh
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   |curl -4o "$Y".pdf -K-

For example,

   echo https://www.docdroid.net/kxfZltq/unsealed-indictment-in-us-v-bankman-fried-22-cr-673-abrams-as-sam-bankman-fried-of-ftx-heads-to-sdny-echoes-of-onecoin-and-un-bribery-cases-pdf \
   |1.sh;
   muPDF unsealed-indictment-in-us-v-bankman-fried-22-cr-673-abrams-as-sam-bankman-fried-of-ftx-heads-to-sdny-echoes-of-onecoin-and-un-bribery-cases-pdf.pdf

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and of course

https://news.ycombinator.com/from?site=docdroid.net

Thanks. We've since changed the URL from https://www.docdroid.net/kxfZltq/unsealed-indictment-in-us-v... to the proper source, which I assume is a direct link with no fuss.

This is an interesting way of writing a quick and dirty script, completely different than I would have written it (I would have definitely have used a lot more subshells, temporary variables, escaped the characters in the commands, "#" in sed instead of "/" and a lot less sed magic).

If anyone is curious as it took me a bit to decipher (and I consider myself quite familiar with shell scripting!):

  read X Y

Read the stdin into X and Y. I'm honestly not sure why read Y here as it's unset and re-defined on the next line?

  unset Y;Y=${X##*/};

Unset Y, use Parameter expansion to match the regex "/" greedy and delete it from the string, assign it to Y. Also I believe that using "" here is a "bashism" so it would not work on a strict posix shell :)

  echo "$X" \

Echo X to be piped as stdin in the next command

  |sed 's/^/url=/' \

Use sed to prepend url= to the string

  |curl -4sK- \

Connect over ipv4 (-4), don't output (-s, silent) and read the config from stdin (-K-). Apparently curl support reading what to fetch from a config file, I was not aware that curl supported that

   |tr -d '\134' \

Delete all backslashed from the input. "\<number>" is the octal ascii code of the character

   |sed -n 's/u0026/\&/g;s/.*\"application\/pdf\",\"uri\":\"//;s/\".*//;s/https:/url=&/p' \

Several substitutions, and don't echo the output automatically (-n). Replace "u0026" with "&" (u0026 is the unicode number of ampersand - not sure why but docdroid use that in their page), all occurrences. Select the line that matches '.*"application/pdf","uri":"' Match "https:" and prepend it with "url=", and print it

  curl -4o "$Y".pdf -K-

As above, parse the config file to download the output to $Y.pdf (-o) over IPv4

   read X Y

"Read the stdin into X and Y. I'm honestly not sure why read Y here as it's unset and re-defined on the next line?"

You can drop the Y but then if you unintentionally have anything after the URL on stdin the script will break.

   unset Y;Y=${X##*/};

"Unset Y, use Parameter expansion to match the regex "/" greedy and delete it from the string, assign it to Y. Also I believe that using "" here is a "bashism" so it would not work on a strict posix shell :)"

There is no regex. This is globbing. It is a shell feature sometimes called "Parameter Expansion". This will delete everything up to "/".

I am not a bash user. I use NetBSD ash as both the interactive and scripting shell.

   |curl -4sK- \

"Connect over ipv4 (-4), don't output (-s, silent) and read the config from stdin (-K-). Apparently curl support reading what to fetch from a config file, I was not aware that curl supported that"

I only use curl in HN examples. I do not use it otherwise, so the -K- option is just a stupid hack to make curl behave more like the programs I actually use: yy025, nc and so on.

    |sed -n 's/u0026/\&/g;s/.*\"application\/pdf\",\"uri\":\"//;s/\".*//;s/https:/url=&/p' \

"Several substitutions, and don't echo the output automatically (-n). Replace "u0026" with "&" (u0026 is the unicode number of ampersand - not sure why but docdroid use that in their page), all occurrences. Select the line that matches '."application/pdf","uri":"' Match "https:" and prepend it with "url=", and print it"

This does not select the line that matches the pattern, it deletes everything up to that pattern in all* lines of the input. It then deletes everything after double quotes from all lines of the input.

Yes, I escaped the forward slashes. That adds some characters. Sometimes when dealing with URLs as input I will use a character that is not permitted in URLs as a separator, such as "<" or ">". As a matter of course, I do not use "#" as a separator because, for me, it makes inline sed comments prefixed with "#" more difficult to distinguish. I also superfluously escaped the double quotes out of habit. No need in this case.

after reading about his parents' high level of involvement, i think they knew there were all sorts of illegal things going on, and decided to not ask too many questions to allow for plausible deniability.

but they gladly kept spending that money and spreading that influence.

and, to seemingly throw away your kid's future because you're so enthralled with finally being one of the true bigwigs around Stanford... smh.

he needed parents.

and the myriad people surrounding him for years during the theft and fraud -- who are now all Pikachu-faced that he could have been doing these dastardly things.

and maybe sbf will get his little brother sent to jail, too.

SBF wasn't paying attention to the SPAC people -- you gotta take yours off the top, like a politician (quoting dead prez) -- not just steal everyone's money, and _def_ don't steal from the rich -- i thought we all collectively learned these lessons.

if we killed SPACs _and_ crypto, where are all the scammers gonna go?

conspiracy. wire fraud. commodities fraud. securities fraud. money laundering. the Federales even threw in a campaign finance charge just for giggles.

I guess we'll get to see what 3 billion dollars and a well connected mother can buy you; I doubt it'll be a free pass, but I'm not expecting anything that resembles justice here.

Corruption works when one is still rich. If the dude's got nothing now (or nothing he can get access too and others can't), he's not worth very much.

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