SBF Written Testimony Notes 12/12/2022

I think the means "take investor money, make customers whole, thereby restore FTX, raise the company value and then pay back investors", which is not fraud. That being said, I wouldn't put it beyond him anymore to publicly suggest defrauding investors.

The latter, the first batch quit already: https://futurism.com/the-byte/sam-bankman-fried-lawyers-quit...

Not sure who's representing him now.

He doesn't consider the bad case scenarios because in his mind, he'll have planned for them. But he is in this scenario. Which is a bad case. That he didn't plan for. That is bad because of his attitude and lack of planning.

He thinks he can somehow fast-talk Congress into thinking he didn't commit a crime.

He's going to go to jail thinking that the jury fucked up by finding him guilty. If they just understood, they'd realize he's better than everyone and deserves to be free and rich and to use your money.

Regarding the "I fucked up" line, I'm not sure that is damaging at all (except possibly the tone; who knows how that will play with a jury).

His lawyers may intend to argue that he was merely made mistakes, and therefore had no intent to defraud anyone.

FTX didn’t suffer a bank run. Diamond-Dybvig describes a bank trying “to call in their loans,” borrowers being “unable to pay back quickly, since their loans were, by assumption, used to finance long-term investments,” and thus “if all depositors attempt to withdraw their funds simultaneously, a bank will run out of money long before it is able to pay all the depositors” [1]. The bank was solvent. Then it was illiquid. Illiquidity finally caused insolvency.

FTX was not solvent to start with. Alameda owed them more than it was worth. The FTT position within Alameda resembles a bank run, but that characterisation is problematic since FTT wasn’t financing anything long term and was issued by an “exchange” doing fraud.

[1] https://en.m.wikipedia.org/wiki/Diamond–Dybvig_model

They first said they did (we're not insolvent, we're illiquid) but that's already fraud. Then turns out they were also insolvent, as suspected.

So yes, please, more pedantry now, to prevent any more attempts at "narrative drift"

CZ, not yet fully aware that he is dealing with an unsophisticated bumbler (and thus the risk that this chat would someday be part of congressional testimony), is talking candidly but at cross purposes with Sammy.

CZ knows (and presumes SBF also knows) how incredibly thin this market's liquidity really is, and thus the potential destabilization that a mere 250k signal could ignite. while Sammy apparently believes something closer to version of the numbers meant for public FOMO consumption.

This little screenshot, (if not eventually proven fabricated, which is almost certainly going to be the counter signal message by CZ, parroted across the crypto community) likely is the biggest bombshell tell in this testimony so far.

That's the beauty of merkle trees-- you just go into your own local copy (or merely paste one from a friend's copy), check your hashes are correct, then upload it to whatever other centralized discovery service of your choice and keep doing business. Even if colluding centralized bad actors tried to append some junk, it only takes one honest friend (or honest you) to get you back to the correct level of nesting dolls. And as long as you can find one honest centralized discovery service to wrap it in, you're back to your original level of convenience.

Oh wait, that's git I'm thinking of. Yeah, these customers are absolutely fucked.

It's not dissimilar to some of the ripped athletic types I'm friends with that try and use their size to an advantage even when the situation definitely doesn't call for it. If a tongue-lashing or an ass-kicking is the immediate gut response, it's probably not the most pragmatic, I've found.

In fact, how does data retention rules specifically apply to apps that don't have large data retention or specifically have no data retention. Besides just making it harder to operate, are there penalties for companies using things like free version of Slack with short windows, or Snapchat/Telegram/Signal with self destructing messages?

I was about to comment on how delusional SBF must be to be this deep in trouble and not snap out back out to reality, leaving aside that "edgy teenager" or whatever mien he's been exhibiting. Is he actually aware of his situation?

Perhaps the move to Fox Hill will help him come to terms with what he's done.

> I would like to start by formally stating, under oath:

> I fucked up.

The second quote is a pretty apt summary of what feels like roughly half the document (I didn't specifically count pages)--there's a lot of criticism of the Chapter 11 bankruptcy team, especially that he felt they were ignoring the offers he had received to keep FTX alive.

Indeed, to the extent that it's a misrepresentation of the testimony, it's because it doesn't refer to another key focus of the testimony "it was actually CZ's fault!"

I am aware that "I fucked up" is a direct quote. The latter statement is not. Don't feign quotes from people if what you're dealing in is not actually a quote. This isn't hard.

And nothing changes the part where the parent comment is a low-effort, Twitter-tier, bandwagon shitpost crafted for lols. It doesn't belong here.

That raises the question of why they didn't keep the same management for the chapter 11 reorganisation.

There's nothing to gain, and everything to lose. Even if there's minimal chance of anything being there, the mere perception that evidence could have been lost would be damning.

The horse has bolted. The fact it got to that point is the point, not what happens afterwards. The fraud and whatever else has already been committed.

Anyone pointing fingers at the bankruptcy team are attempting to distract from the core issue (which is precisely why SBF is doing it - don't look at the monumental mess I made, look how badly they're trying to clean it up).

Also I do find it somewhat credible that he drank his own cool-aid.

Important disclaimer: I would never associate "price of token goes up" with "value was created". The only way to create wealth (sustainably) is to create value in the world & capture some %age of that value.

However, I do somewhat believe that he may have thought the many-year run of on-paper profits was more material than it actually was. In the same way that many gamblers believe they have a system, etc.