Sam Bankman-Fried is going to jail
arstechnica.com
arstechnica.com
I reckoned he'd escape some how being let off on some technicality of some prosecutor not following due diligence.
“Do not count on the gratitude of deeds done for people in the past, you must make them grateful for things you will do for them in the future.”
- Mario Puzo, Omerta.
which means SBF won't be able to read it
I doubt there was any time in his career where all the accounts were fully legit and he could have cashed out. There would always have been some investors who hadn't got the returns they expected and would have gone digging.
Valuations don’t mean much until the money changes hands, typically with the asset holder losing.
Short answer is they're (their stock is) worth as much as people are willing to pay.
If you read the article, all it says it that he's going to jail for the completely legal act of publishing correspondence that was sent to him. He hasn't been sentenced or convicted or anything. The judge just doesn't like him.
Theoretically, you deny bail to people who are flight risks.
...from the private diaries of his ex-girlfriend and former business partner who is now testifying against him, making this the latest in a long series of failed attempts at witness tampering, a federal crime in its own right. It's also what has turned out to be the last straw with a judge who has up to this point been astonishingly tolerant with all the other ways Bankman-Fried has tried to screw around with the remarkably lenient terms of his former bail agreement.
… "in order to intimidate a witness in the case".
Clearly the judge didn't consider it "completely legal", presumably based on 18 U.S.C. § 1512[0] which says the following may result in a fine or imprisonment (edited for brevity):
(b) Whoever knowingly uses intimidation, threatens, or corruptly persuades another person, or attempts to do so, or engages in misleading conduct toward another person, with intent to—
(1) influence, delay, or prevent the testimony of any person in an official proceeding;
(2) cause or induce any person to—
(A) withhold testimony, or withhold a record, document, or other object, from an official proceeding;
...
(d) Whoever intentionally harasses another person and thereby hinders, delays, prevents, or dissuades any person from—
(1) attending or testifying in an official proceeding;
hah no. The billionaire claim was bull used to promote himself and his businesses. I wouldn't be surprised if a detailed accounting showed that he has never had a positive liquidation value for FTX and Alameda at any point in time.
It's a common problem people have in reasoning about fraudsters-- there is a tendency to only peel back one layer of fraud and get caught because the fraud continues all the way down. :)
Granted, but as we have seen with these exit scams you don't need to be operating a cash or crypto positive business in order to run off with people's funds.
All of these leaks and loans etc... were likely him siphoning funds if/when he was eventually caught. I still think it takes a certain kind of crook to setup shop in the Bahamas, purchase an immensely ostentatious home, make your sexual proclivities known to the World while splashing money around to make politicians make favourable legislation for your crooked business, stream yourself playing video games while doing pitches to VCs and getting them, all while talking about effective altruism and guaranteed yield and none of that has to do with being business savvy and everything to do with be a grifter.
He is like Razzlekhan's bf, he had a golden ticket with billions in BTC and could have just woke up and left to Russia or Belarus (and eventually Turkey where all the Oligarchs are now buying up sea-side Villas given the distressed Lira) where he could have even been chummy with Putin given how he evaded the US intelligence community: instead the two were out buying Playstations with walmart gift cards and making shitty rap videos on youtube and got pinched when they left a copy of the private keys on a cloud server!
But the kind of grifters who are able to say "this is good enough" don't tend to find themselves atop such a gigantic scheme to begin with... they scam off a few million dollars and fade silently into the night.
Call me cynical and conspiratorial, but I expect that the camera glitches are being set up as we speak. The sleepy guards being scheduled. The one photo of "his body" being generated. On the bright side, at least SBF isn't tall enough to simply stand up if he were to "kill himself" in his cell by hanging.
What gives me optimism is that if this is done, we can at least have some visibility into his accounts.
Even assuming it's true that Epstein didn't take his own life, SBF holds nowhere near the level of significance to justify such actions. The matters he's been associated with pale in comparison to Epstein and the potential political fallout is extremely minor in comparison.
The grim, yet in all probability accurate, reality is that confronting the prospect of spending numerous decades incarcerated is an exceedingly tough pill to swallow, particularly for individuals who've enjoyed rather comfortable existences and anticipated its continuation.
If, by any chance, we find SBF in a cell dead it's significantly more probable that this is the underlying cause.
Yep, even with their omertà vows, that's what finally got the New York mob to start turning on each other. Nobody, even those street-hardened guys, wanted to spend decades or the rest of his life in prison, so they started cooperating with prosecutors.
“Bankman-Fried contributed more than $70 million to election campaigns in less than 18 months, placing him among the nation’s top political donors. He personally gave at least $40 million to politicians and political action committees ahead of the 2022 midterm elections, mostly to Democrats and liberal-leaning groups, making him the second overall top donor to Democrats, only behind George Soros, according to the Center for Responsive Politics.”
https://time.com/6241262/sam-bankman-fried-political-donatio...
Should you hold the view that politicians are entirely self-serving and akin to human cockroaches, there's minimal justification for endorsing him or expending even an iota of political capital on him moving forward. Conversely, there's ample incentive to distance oneself from him at present while fervently attempting to retain possession of the funds he has already contributed.
Formerly an asset, he has now transformed into nothing more than a liability that can be side-stepped by just feigning ignorance and maintaining distance.
Can someone give me a link to a single, concise article that explains this whole thing from the beginning?
That about sums it up.
I think some people just want/enjoy/need to play the game regardless of what the score is.
Or [0]...
This is peak HN, as is the bulk of the top post, you guys are entirely clueless and refuse to see anything that detracts from your own insular narrative(s). Seriously, if you think SBF was a conman, which he is, thenyou should really take a dose of reality and see what pillars SV and big tech as a whole is built on. it really is no differnt than that of Mega corps, Wall Street and Banks.
He and his ex-gf worked at Jane Street, and are part of a SV elite in-class, they (but specifically SBF) were already living the high-life before they even knew what Cryptocurrencies were. That was probably never thier goal, they probably sought relevance in a World that was curated and manicured for them because of what class they belong to; only to find out that this space will eat you up and ridicule you to no end if you suck at it mercilessly: I speak from experience as a founder in this space. And to be honest, these two are worse than RazzleKhan and her bf (look it up) as they take the cake at sheer incompetence.
Sidenote: I'm glad it was downvoted as I know it struck a nerve and serve dit's intended purpose; but I'm also really starting to feel I am becoming a sort Tech-Diogenes around here, and I'm not sure if that's good or bad seeing as how I know how is fate ended.
COWEN: ...let’s say there’s a game: 51 percent, you double the Earth out somewhere else; 49 percent, it all disappears. Would you play that game? And would you keep on playing that, double or nothing? So, what’s the chance we’re left with anything? Don’t I just St. Petersburg paradox you into nonexistence?
BANKMAN-FRIED: Well, not necessarily. Maybe you St. Petersburg paradox into an enormously valuable existence. That’s the other option.
https://conversationswithtyler.com/episodes/sam-bankman-frie...
You do have to be smart to see that there might be a more positive outcome. But you have to be unwise to gamble.
My first boss (trading) told me, "Our job is to be in business tomorrow". Which is relevant because in that business you actually can blow up in a day.
And some people seem absolutely unable to understand the probabilities involved. It seems to almost be a requirement for startup leaders.
Not over the long run. The house always wins.
I'm not sure I'd even call this 'understands how things work' - everyone who's heard of marginal utility knows that large scale double-or-nothing 51/49 gambles very rarely make sense to take.
To me this sounds more like someone hopped up on a nootropic that causes compulsive gambling, like Emsam.
The "logic" that are using here would justify everyone to go to a casino and put their life savings down on black.
It's gambler brain logic just couched in pseudo-intellectual terminology to make them sound smart. The equivalent of techno babble for gambling.
> And would you keep on playing that, double or nothing?
The point being that if you'd push that button now, in this world, then what would be different in the new world to stop you from pushing the button again? There's no stopping point, hence the St. Petersburg paradox. Maybe the button has already been pushed, maybe multiple times. If anything, Cowen seems to be presciently pointing out that SBF's attitude will inevitably lead to disaster.
SBF does seem to be misunderstanding: push the button forever, and maybe magic will happen!
Which is actually why it's both intelligent and dumb at once. You have to have done some reading in your life to understand this thing. As someone who did well at math and worked in trading, he would have come across it. But it's also unwise because actually lots of other people have also studied it for a long time, and they are not declaring victory.
Which could totally have been the case, naturally everyone on the floor had watched the movie and some knew the people involved.
The game is a simple 50/50 for a win or loss. You begin with one unit (say: $1). Every round you don't lose the stake doubles. The game terminates if you lose. How much should you pay (expected value) to enter such game? Given the bank - offering you the gamble - has infinite resources the expected value is infinite.
Well of course one way [0] (another more nuanced way is to question the simple axiom of maximizing the expected value [1]) to resolve the paradox is to limit the resources realistically, analogous to Martingale [2].
Given the world's GDP at ~ $100 trillion (or about N ~ 46 rounds) the expected value (beginning with $1) would be only about $(N+1)/2 so in this case $23,5.
[0]https://en.wikipedia.org/wiki/St._Petersburg_paradox#Finite_... [Note: the numerical examples begin with $2]
[1]https://plato.stanford.edu/entries/paradox-stpetersburg/
[2]https://en.m.wikipedia.org/wiki/Martingale_(betting_system)
We don't all know that. There's an ever-decreasing but nonzero probability that you will keep getting heads.
But the probability that the next flip is heads is .5 no matter how many of the previous flips were heads :)
But with enough flips, the odds getting heads on all of them comes close enough to zero that they are effectively zero.
1/2 * 2 + 1/4 * 4 + 1/8 * 8 ... = 1 + 1 + 1 ... = ∞
Of course, the proof only works if dollars continue to have linearly increasing value to you as you keep accruing them. If their value to you logarithmically increases, the expected value is not infinite.
But the reward is not limited there. Once you reach each and every "balance point", the next step is 50% chance for doubling the reward. If you currently have X, the value of continuing to play is 1.5X. This is independent of how big X is, or how unlikely you have made it this far (sorta a reverse Gambler's Fallacy). And it's why the expected value is infinite.
I was wondering because it would seem with Cowen's example the expected value is just $1 (ignoring the 51% edge). The 51% edge ends up making the expected value infinite, so the intuition lines up even though the exact details don't.
That SBF answered this (rhetorical) question that confidently and quick with not necessarily but what followed was simply something like look on the bright side is effectively imho parroting but at least he handled the verb eloquently. It would certainly take me like 20-30 seconds to process it.
Anyway, kudos to Cowen for having SBF on there and letting SBF talk and expose himself.
But increasingly I think he's just crazy. Not crazy enough for an insanity defence. But too crazy to act reliably...
This results in the weirdest excesses and - invariably - they are proven right over and over again. Daddy will bail them out, buy off the authorities or donate to the school and all is forgiven. Running into the wall at this speed has to be a rude wake-up call.
Nice term. Logan's kids on the TV series "Succession" definitely exhibited that affliction.
> Couch was indicted on four counts of intoxication manslaughter for recklessly driving under the influence. In December 2013, Judge Jean Hudson Boyd sentenced Couch to ten years of probation, subsequently ordering him to undergo therapy at a long term inpatient facility. Before sentencing, Couch's attorneys had argued that Couch had "affluenza" and needed rehabilitation instead of prison, arguing that Couch had no understanding of boundaries as his affluent parents had never given him any. Couch's sentence, judged by many as outrageously lenient, set off what The New York Times called "an emotional, angry debate that has stretched far beyond the North Texas suburbs".
I can't imagine what it would feel like to fall from such extreme heights to such extreme lows.
Your description of the ground beneath breaking up over again and keep falling deeper is very apt. That's exactly how it happened.
[1]this is the most infamous example https://archive.ph/Yg64e
It's the hagiography removed from Sequoia's website which amongst other things praises him not doing any due diligence on his business deals as understanding the prisoners' dilemma, paints him dropping out of his first job without a plan as ingenious "risk neutrality" rather than what loads of disaffected graduates with a safety net do and sees his decision to play League of Legends through his investment meeting with them as a sign of how awesome he is rather than a warning sign about his priorities and/or executive function...
Members of every generation have said this (or similar) about the generations that have come after them.
It's part of the reason some people don't post bail - if you're pretty sure you're going to end up in prison anyway, you might as well get started early so you can get out sooner.
Don't get me wrong -- aging isn't for the faint of heart, and you are absolutely more likely to have health problems when you're older vs when you're younger.
But how healthy you live in your youth has an enormous affect on the odds of having major health problems when you're older.
As an older person myself, I suffer from several age-related health degradations, but they are relatively minor (as are the ones of nearly everyone my age that I know). And the upside to being older far outweighs those downsides.
Perhaps I'd feel differently if I had a major health issue -- but perhaps not. You can have a major health issue at any age, after all. All in all, being older is such an improvement that even if I did have major health issues, I suspect I'd still prefer to sacrifice my younger years over my older years.
But that's just me. Others likely have different opinions.
I would imagine nobody does it to get paid but who knows.
In lots of the world, if you're found guilty then the state pays for your prison cell and food. Yet if you're found not guilty, then you have to repay the state for the food and accomodation you wrongly received.
You will be held in the county jail, usually somewhere in your metro area, until your sentencing. It is much easier for people to visit you in the local jail than it will be once you're shipped out to the state pen 2 hours away. After a few rounds of 4-hour commutes for a 30-minute visitation, people stop coming to see you.
Taking the fall early keeps you out of trouble too-- no babies being born 9 months into your sentence or drama arising from you "just trying to talk with" witnesses.
SBF knowingly went down a road that would land him in prison. His current behavior is self-destructive in exactly the same way. You can't expect SBF to behave rationally because if he was capable of that he would still be living the wealthy crypto life. He wouldn't have started a ponzi scheme in the first place.
To my knowledge there was no ponzi mechanism where older investors were paid from money invested by newer investors.
SBF also famously joked on the odd lots podcast that he was in the ponzi business.
It was obviously some form of pyramid scheme based on the rate alone.
And very achievable in tradfi.
Plus staking/lending was only a tiny part of their business.
Ftx was a huge fraud. Just not the flavour you think!
And where would you have achieved 8% yields in a liquid instrument, prior to the recent Fed rate hikes? From the end of the GFC (and the start of QE) until when the current hiking cycle began, 8% was basically the cap of junk bond yields[0]. Half the time, it was under 6%.
Sure, you could probably have bought rental property or invested in a small business and come out above 8% yields, but those are highly illiquid and not comparable to deposits at FTX.
The same applies to this. If someone offers you 400% it's a scam (Ponzi or otherwise). If someone offers you 8% it's risky or there is some other reason no one else has touched it.
8% is not inherently unachievable. Just good (and therefore likely there is some risk).
For me intelligence is having good models of how the world works. Wisdom is making good decisions.
When the thing is high profile enough and tightly put into the system they will end up getting the legal punishment but the process for them is way way less painful. Cross a border illegally? you sleep on the ground alone, covered with foil blanked for months in a detention center, you final punishment might not be something very high but your process is painful. You defraud people, go after them and, harass them and if you get caught you are surrounded with people sympathetic to you, trying to make sure that you don't have a time of hardship other than you are legally required. The final punishment can be something like living for many years in a highly secure building with no personal schedule and access to the rest of the society but at no point you suffer beyond that. You also get lot's of people around you trying to make sure that you will live in that building as less as possible.
IMHO He will not grasp the seriousness of his situation until everything is over and starts feeling some pain when he has some brilliant idea about crypto or something but he is locked up and can't pursue it.
Indeed. That's why there's a rule of thumb that says that the instant you think you're better or smarter than everyone else in the room, you've just become the dumbest person in the room.
Just as a point of interest, in terms of a legal defense in the US, "insanity" isn't what a lot of people think. It's not a medical term, and whether or not you're considered "insane" by the medical community doesn't enter into it.
All it means is that the person is unable to discern between right and wrong. That's it.
And if you successfully employ the defense (which very rarely succeeds), it doesn't mean you go free. It more likely means that you'll be institutionalized differently.
None of this is crazy. You're going to lose for sure, and then there goes your life. Literally anything makes sense to do.
Try to seduce the prosecutor. Hypnosis. That one spell from Harry Potter that lets you control people. All better options than doing nothing.
Why would he be trying anything except (a) staying on bail and (b) arranging to disappear to a non extradition country?
If he gets his due, he's gonna be doing 10-40+ years. I think there's a real chance he won't get the book at him (eg Jeff Skilling, don't know if I spelled his name right, don't care). It's not really worth it. Plus, everyone knows what a POS you are, which undermines your whole goal of making the world think you're an angel.
Anyway it's actually not a "smart person / dumb person" thing. You can be plenty smart, and you will probably still do some headscratching things in these situations. People reliably do. Lawyers do.
I'm also still just shocked that you seem to assume good decision making from the man, considering his history.
Now instead of being able to prepare for the defence at home he has to sit in jail and wait.
Wow…
Looks like his parents did too good a job there. SBF didn't just persuade those around him that the future was glittering and guaranteed, he persuaded himself.
Surely they are very often paid to tell you what likely legal consequences might transpire in the future based on actions that you take in the present…
Intimidating those witnesses might then be worth it even if getting caught at that means spending the time between now and the end of your trial in jail.
From another comment it appears that he is someone who would take a bet if it is slightly in his favor, even if the reward is only a little more valuable than the risk.
It affects more than that, though. He will not be getting any leniency in sentencing because of this, for instance.
SBF imagined himself among the elite; he's not.
When faced with a situation like this it can be agonizing and you're powerless. You would definitely harbor fantasies that there's just one little thing you could do to fix everything.
All you have to do is convince yourself that you just might be successful. If your case is hopeless, and the consequences catastrophic, literally anything you try including summoning space aliens is better than accepting certain defeat.
https://www.nytimes.com/2023/07/20/technology/ftx-caroline-e... https://nypost.com/2023/07/21/caroline-ellison-whined-sbf-br...
Sort of like when one of the government agencies issued a huge fine to a company that wronged users. Will I ever see a dollar of that? It’s punitive consequences, but not justice.
[1] https://podcasts.apple.com/us/podcast/the-journal/id14693949...
Lots of discussion here from days ago: https://news.ycombinator.com/item?id=37092861