$8B Sam Bankman-Fried criminal trial starts today
cnbc.com
cnbc.com
Here's a direct link to the FTX debtors complaint against the parents (PDF):
https://storage.courtlistener.com/recap/gov.uscourts.deb.188...
The Preliminary Statement begins with:
> This action seeks to recover millions of dollars in fraudulently transferred and misappropriated funds from the parents of FTX Founder Samuel Bankman-Fried (“Bankman- Fried”): his father, Defendant Allan Joseph Bankman (“Bankman”), and his mother, Defendant Barbara Fried (“Fried”). As Bankman-Fried’s parents, Bankman and Fried exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars, and knowingly at the expense of the debtors in these Chapter 11 Cases (the “Debtors” or the “FTX Group”) and their creditors.
Supposedly he still felt inadequate and hated his life...
They pay like crazy, if you are good, you make bank.
If not, they fire you
I'm not saying I would get upset if I didn't get it. But I would certainly ask for it.
In this case, the people who were defrauded.
There is no free lunch, if you aren't adding value to the economy equal to or exceeding what you're taking, you're taking from someone else.
(Editing to respond to child comment below - you don't be daft, SBF nor his father never thought the business was legit, they architected the fraud!)
Seems to me they are just takers.
The likes of buffet and the other 3,000 or so billionaires who choose to live quieter, less Gatsby lifestyle are better role models IMO.
With Elon, he brought to cost of sending payloads into space down by a factor of more than 10.
With electric cars, he made them economically viable that many others had failed to do before. Tesla is an incredibly human efficient company compared to its competitors Ford and GM.
Same with Gates, Bezos and Steve Jobs, they got people and capital organize to boost the productivity per person working for them and people using their output (software and devices)
Good technology amplifies per person productivity.
We may hate the personality and character, but what’s worth looking at is what would be the world be like if there was no Tesla, Amazon, SpaceX or Microsoft?
He is not doing it now, what he did with X, Boring Company, etc us not this.
It's possible for someone to do good, then do bad at a later juncture. That's what I'm saying is happening with Elon, etc.
If building Amazon, Tesla or spaceX is that easy, where is your company that changed the entire industry? What did you accomplish so far? You may not like the way they comment on social media, but they have tangible results to back up their reputation. Unlike other types of "celebrities", they actually built tangible things that most people would consider good even if they hate the face of the owner (eg. reusable rockets, electric cars, Amazon delivery, AWS, etc.).
She was a teacher, she probably taught some people some things. Maybe they were bad things? Was she the bad apple that ruined the bunch?
Is this Stanfords MiT media lab moment?
I remember thinking wow how strange, I wonder if these guys are doing sketchy shit. Little did I know.
Thinking about it it's crazy to me that the simple fact of avoiding being headquartered in the US to evade financial regulations is not enough to be treated as a highly suspect enterprise and being restricted from advertising to US consumers on TV.
In a way, it's like Theranos, it wouldn't be that hard to conduct just enough due diligence to notice something amiss, like the machine barely worked...
It's really hard to say. On one hand he's a privileged white guy. On the other he stole from a lot of rich people. Bernie Madoff was sentenced to 150 years, but in reality anything over 20 was a life sentence for him. I'm kind of expecting the court to throw the book at SBF simply because he was so brazen about it. When you get that far out of line people want to make an example out of you.
But yes. If you're a rich guy, best to avoid stealing from other rich people; it does seem to be one of the few things that results in them going to prison.
Oh man, that hurts, ha! In 15 years he'll still be younger than I am today. I know I'm old, but still, ouch.
The future is now, old man!
FTX was just a particularly fetid pool in a massive swamp of an industry.
This isn't to say he shouldn't get a decent chunk of prison time.
https://www.bloomberg.com/news/articles/2022-07-14/celsius-b...
https://fortune.com/2022/06/14/celsius-freezes-assets-big-ca...
FWIW, and I don't know whether to be cynical or impressed by this, but claims ($19.5BB) against Madoff's fraud have been largely restituted ($14.6BB, ~75%).
There were individual human investors in both Madoff and FTX. There were also wealth funds and the absurdly rich in both.
But as it stands today, FTX may have done more harm to humans than Madoff.
She also claimed mitigating circumstances.
e.g.
https://www.cnbc.com/2022/12/05/sam-bankman-fried-could-face...
A. Max sentence:
Wire fraud on customers (20 years max) + conspiracy to commit same (20) + wire fraud on Alameda lenders (20) + conspiracy for same (20) + conspiracy securities fraud on FTX investors (20) + conspiracy commodities fraud (25) + conspiracy money laundering (20).
145 years total possible
B. Determine SBF's offense level under the Federal Sentencing Guidelines, §2B1.1 (fraud): See https://www.ussc.gov/sites/default/files/pdf/guidelines-manu... and Ctrl+F for "2B1.1" to ride along:
Base offense level (7 levels) + Greater than $550,000,000 loss (30 levels) + Resulted in substantial financial hardship to 25 or more victims (6 levels) + Offense otherwise involved sophisticated means (2 levels) + Defendant derived more than $1mm in gross receipts from one or more financial institutions (2 levels, maximum, due to a cap from earlier calculation) + Violation of securities / commodities law and defendant was "associated with a broker or dealer" or officer/director of a "futures commission merchant" (4 levels)
51 levels
C. Determine the Guideline sentencing range. See https://www.ussc.gov/sites/default/files/pdf/guidelines-manu...
x axis: no criminal history. y axis, we calculated 51 levels.
The Guidelines therefore counsel life in prison.
D. Calculate sentence
The maximum sentence for each count is between 20-25 years. Under the Federal Sentencing Guidelines § 5G1.2(d) and Second Circuit precedent, sentences will be stacked consecutively "to produce a combined sentence equal to the total punishment." United States v. Evans, 352 F.3d 65 (2d Cir. 2003). In our scenario, that would be 145 years. This is the same legal reasoning used in stacking Bernie Madoff's sentences in the same federal district court, by the way.
E. Judge chooses sentence. He can depart downward from the Guidelines
Appeals courts are deferential to trial court choices in sentencing, so Judge Kaplan will have substantial latitude in choosing a sentence. That said, a judge may not be too favorably disposed to a defendant who stole billions of dollars from over 1 million customers, most of whom were ordinary people; who used Tom Brady, Bill Clinton, Tony Blair, Shaq, and Larry David as unwitting pawns; who advertised his scam in the Super Bowl and splashed its name on an arena; who used customer money to buy lavish real estate in the Bahamas, purchase favor from politicians, and make reckless leveraged bets
Given that half of the chart is taken up by >75-year sentences, with some of them in the 200s and 300s, before hitting life, federal prosecutors seem to be a lot more confident in the miracles possible in the federal prison medical system than I am.
I don't know enough of the details to plug it in to get an accurate estimate, but I'm pretty sure he managed to hit the maximum fraud offense level, at which point I'm getting an offense level of 40, which for a first time offender, is 24-30 years. Which is high enough that other factors (such as maximum sentences for crimes) are going to come into play, but it does strongly suggest that realistic prison time is going to be involve decades.
[1] This isn't entirely accurate, but maximum is a more accurate estimate than adding them all up. You actually group offenses by relatedness, and max within groups and sum the various groups, but for most practical purposes, there's only one group of offenses.
High profile trials (Musk, Trump, OJ Simpson, Madoff) are high variance in outcome.
It's pretty cut and dry - he's looking at about 45 points on the sentencing table. Not too long ago these were mandatory guidelines and as a result he'd be looking at life in prison.
Now a days these are recommendations and since he got pretty lucky with the judge they'll likely discount it 50ish %. So realistically he's looking at 20 years and with good behaviour he'll be out in 10.
Just off the top of my head RDAP will get him 1 year off (he for sure qualifies) and then a halfway house is another year although not everybody loves those. I have no idea if he’d be able to pull off a 35b or not. But you get the idea, it’s not JUST time off for good behavior.
I’ve been reading Michael Lewis’ account of SBF: he genuinely sounds unhinged.
Sorry I've been binging "Inside the Worlds Toughest Prisons"
It’s just something we (automatically) place certain people in so they don’t (automatically) perform actions that society as a whole (automatically) disagrees with.
But there’s no point arguing it because in your hypothetical free will-less world we don’t have a choice in the matter. But also we might argue it anyway because we don’t have a choice not to :)
It sucks that once you are in too deep, it's hard to stop, but you always had the option not to take the first step.
Granted, I'm a victim of the Gemini Earn unregistered security scam [1], and so maybe I cannot be an impartial judge here, but SBF is kind of the only non-violent offender that I can think of right now that I honestly feel should be locked up and throw away the key.
[1] Before you give me a lecture about how I should have known better and how you'd never fall for such a scam and how Gemini's claims of FDIC insurance would never fool anyone smart, just rest assured I've heard it from the denizens of HN and my peers. I know I was stupid to have done anything with cryptocurrency, and even more stupid to think that Gemini wasn't misleading people about their Gemini Earn program. Just to be clear though, it's not my accusation to called Gemini Earn an unregistered security, it's the SEC's (https://www.sec.gov/news/press-release/2023-7).
The US is pretty punishment-heavy. As a non-US person it even looks sadistic. It's "now I got you, you son of a bitch" social game from "Games People Play".
Since you're against "punishment as a whole", I assume you by "punishment" mean "I want them to suffer for what they did"?
Giving more than (say) 20 years to most 20-year-old murderer is no different from 120, from either deterrence perspective. When they're 40 they'll be a different person. 120 years of terrible prison conditions does not make anyone better off, compared to 20. Except for the victim's "sense of justice". But man, 20 years? No year more than that will bring your loved one back.
Anyway, I agree that we need both types of deterrence for SBF. Otherwise what's to stop people counting on getting "only" 10 years. Steal a billion dollars, hide it in cryptocurrencies, and when you get out of prison you're older, sure, but you are super rich.
We need deterrence from him doing it again. And we need deterrence for everyone like him, and everyone who would be remotely involved him people like him. People need to know that if you help this kind of scam, there are dire consequences. Which is why his parents should face the full weight of the harm they caused, to show that it will all be taken away.
But I don't see that as "punishment". Not in the way I think you mean it.
Is there any evidence of that?
I say this with sympathy as I suspect some number of violent individuals have as-yet-undetected genetic abnormalities that would make them 'blameless' for their actions if we could track it down. However that wouldn't change their behavior. My son has a non-violent known genetic abnormality and in 20/40/60 years his behavior wouldn't change unless some effective treatment is found.
So I think there needs to be some realism injected into this discussion. There are people I would not want as next door neighbors even after they've served a long prison sentence.
There may be some people who are irreparably 'genetically damaged' from birth and will never improve, but this isn't the general case.
I'm quite confident that 18 year old me was still basically a child. I never committed any violent crimes when I was 18, but I did a lot of other dumb irrational things that I don't think I'd do now.
I'm not saying they'll necessarily be great people. But people do change. Especially the understanding of consequences is not fully developed in your early 20s.
So even if they are basically the same people, they would be much less likely to act on it at 40 than at 20. And really, we're talking about deterrence of committing crimes, not deterrence of bad moral character.
Yeah, I clarified in a sibling comment, but that's basically what it comes down to.
I generally just don't think punishing people with the express purpose of making them suffer is a good thing. I think it's cruel, and I also don't think it actually works in regards to helping society long-term. The fact that it's sort of common knowledge that you'll be sexually assaulted in prison, and people seem bizarrely fine with that because "they deserve it" really disturbs me, for example.
In regards to SBF specifically, I'm not convinced he won't try and run a similar scam again; if not in the US, then in another country with less strict securities laws. He doesn't appear to have any remorse about what he's done, and blamed everyone but himself for everything.
But the fact that SBF would do it again is not a case for vengance/punishment, but for deterrence. And, frankly, it's harder to launch your next scam while you're currently incarcerated.
I hear you saying "I don't want vengance, but…", but there's actually no contradiction there. You want deterrence and to prevent recidivism.
And merely taking all his money, and all his parents money, is not actually a deterrence. But that doesn't mean prison is vengence/punishment for punishment's sake.
While a blasé attitude toward such abuse is certainly reprehensible, I don't think there's any support for the magnitude you describe.
Even the most dramatic statistics imply that prisoners are far more likely to not be assaulted.
Official numbers are like 2-5%, activist numbers are in the 20% range.
Anything greater than 0% is horrifying of course. Although FWIW I also checked official and activist numbers for non-incarcerated males and females in the US, and it's actually very similar.
(Never been in prison, never been a victim, never been a perpetrator, not in law enforcement, not an activist, don't know what I'm talking about, but wish the problem could be understood honestly and eliminated completely.)
If that 20% number is right, that's completely terrifying. A 1 in 5 shot being sexually assaulted is still very high, and when I have argued with people about prison reform, they seem wholly uninterested in fixing the problem.
There was an interesting interview with Matt Cox (stole $55 million or so via mortgage fraud) where someone asked him what amount of prison time would have deterred him from re-offending (he got like 30 years originally).
He said anything above 5 actual years in prison (so like 8 sentenced years) and he was never breaking the law in a major way again. That losing such a length of time was not worth any amount of money to him, essentially.
I don’t think without the threat of jail - which is society taking away your time - some violent people would avoid crime.
Non-violent and financial crime is a different story. SBF should go to prison for life and maybe that would dissuade others from trying to pull of scams of this scale. Every politician who accepted money from SBF should also go to prison if they don't return 100% of the money given to them.
Sounds like a perfect solution fallacy.
If someone carjacks a car they are willing to accept the risk that the person they're robbing may have a gun. They are literally willing to put their life at risk, something only someone with nothing to lose would do. Do think maybe getting caught by the police and spending 10 years in prison is as big of a threat to this person as being shot and killed (a risk they've already decided to take)?
However, incarceration incapacitates convicts and prevents them from being able to re-victimize the public for the duration of their incarceration. Locking up serial killers is a good idea, not because it dissuades other would-be serial killers (it probably doesn't) but rather because a serial killer who's locked up in a cell is a serial killer everybody else doesn't have to worry about.
(Furthermore, the threat of punishment probably does dissuade the kind of murders that might be committed in 'cold blood' by rational people. For instance, it may be easier for a robber to shoot everybody in the jewelry store than to waste time with crowd control, but doing the robbery nonviolently is incentivized by the severe penalties for mass murder.)
But I think you can't make that claim about financial criminals like Bankman-Fried or Bernie Madoff; these were not victimless crimes. They victimized many people, therefore putting them in prison for the rest of their lives is a fairly straight forward way of making sure they'll never get the opportunity to do it again.
> Not to mention any collateral damage such as the offender's family who may now also suffer and be drawn more towards conditions that would breed crime.
Particularly in the case of these two men, the damage to the offenders family is completely irrelevant; their families are wealthy and are probably beneficiaries of the crimes anyway, so screw their feelings. And it's not like Bankman-Fried has a young son that will grow up to be a criminal because his daddy is in prison. Elizabeth Holmes has some kids but I'm confident they'll be fine with their mother in prison; their father's family has plenty of resources to raise them properly. And what of the children of the victims of white collar crime, who will grow up poorer because their parents were scammed? This 'family impact' angle of objection to imprisonment for white collar crimes isn't very persuasive.
If you steal someone's life savings you've harmed them way worse than just giving them a beating. And investment fraudsters tend to also have a lot of victims.
That's never mind the physical harm that results from the stress of losing your life savings, including substance abuse and in extreme cases suicide.
If you're not willing to do these things, you should just do away with the law in question. Otherwise you reduce the respect and confidence people have for that law, and by extension all law.
I sincerely believe in the death penalty in cases where more than $1 million is stolen. Let's put the fear of god into the white collar business criminals and then maybe they'll rethink things.
I'm not even sure how you'd fully quantify that; suppose I had a flash drive with a crypto wallet worth two million bucks in my backpack, and then when I get up to go to the bathroom someone steals my backpack.
Now, technically this person stole "more than a million dollars", but I don't think you'd suggest we dust off the gallows just for snatching a backpack would you?
Disagree on $1 million being a low threshold. There are fraud operations out there that steal $10k from one pensioner and $50K from another that in aggregate hit $1 million. I think everyone involved in the fraud end of something like that deserves to forfeit their lives.
While I could see myself getting onboard with locking these fraudsters up for the rest of their lives, I think our disagreement stems from the fact that I think actually executing people should be reserved for explicitly violent crimes, if at all. As stated, I'm broadly against the death penalty in any case, but I'm more amenable to it in regards as a direct means of public safety from violence.
If you reach some reasonable total let's say 100 years just do death penalty then.
> Every politician who accepted money from SBF should also go to prison if they don't return 100% of the money given to them.
Even if they surrendered all the money given to them, and lets assume they even paid interest and another fine on top of that, I'm not sure they should be allowed to be politicians anymore.
Politicians are very specifically a "trust" job. The fact that they even took the money signals that they were receptive to bribes, and I think should signal to the courts that they cannot be trusted to represent the will of their voters. Just because bribes and lobbying are commonplace right now doesn't mean they should be.
What I don't like is the American take [1] of locking people up for years and years and then ruining their remaining lives with a felony conviction making them forever unemployable, all to stroke some kind of cosmic idea that we are "even" for whatever they did.
If you look at other countries that have a much higher emphasis on reformation, and less of an emphasis on "punishment", they have a measurably lower recidivism rate.
That's basically what I'm getting at; I don't really believe in "punishment" as some cosmic good, I believe in maximizing safety and reformation.
[1] Just a disclaimer, I'm American.
One more recent example is DUI enforcement and license revocation,[1] or tax evasion jail time. The goal isn't entirely to reform those who commit the crime, or keep them from being able to commit further crimes, but to increase the percentage of people not committing crimes by changing the perceived risk to reward ratio.
Eg, a rape victim is likely going to have at least mental scars for much of the rest of their life, there's nothing cosmic about the rapist having to suffer for at least a comparable length of time for inflicting that on the victim.
A rapist should obviously be put in jail to prevent them from raping other people, so I'm not saying that they should be free from consequences, but no, I don't think the world is better place because we have a bureaucratic reenactment of "I Spit on Your Grave".
Maybe in some isolated case a violent offender will feel the punishment and pain they're getting and then empathize and feel like they brought it on themself, but I think in a vast majority of cases, the offender has already rationalized what they're doing and just gets increasingly mad at the system.
How exactly would you even measure a "comparable length of time of suffering"?
I agree they're not terribly common. That's fine if people disagree.
I think you live in a sheltered little bubble. In fact we know from your first post in this thread that when you're personally impacted by crime you quickly change your tune, much like hundreds of thousands of former NZ Labour voters.
That's actually not what I said. I was disclosing a potential bias but I never said that I "changed my tune".
I was mugged about two month ago and had my expensive iPhone stolen out of my hands. I filed a police report and reported the phone stolen to Apple, but I very explicitly said that I didn't want to press any kind of criminal charges on the off chance that the phone is recovered and the thief was caught.
People still steal iPhones?? I thought the non-reusability of parts had eliminated that problem.
Sorry to hear about your misadventures, I hope you were not injured.
This guy did! Snatched it right out of my hand. I of course did the iPhone lock on "Find My", and since I reported the IMEI number to the police I don't think they'll be able to easily activate it, so I suspect that the phone is probably on the bottom of the Hudson now.
He did lightly shove me, but I wasn't really "injured" at all; not a scratch on me outside of my ego.
Once you're out you still need to survive. And if the only way of survival is more crime that's what you choose.
I have trouble finding good evidence for this. Easy enough to find cherry picked numbers when someone is trying to make a point, but what I see is that the data on recidivism is pretty noisy and subject to a number of parameters that can make it hard to compare across jurisdictions.
https://worldpopulationreview.com/country-rankings/recidivis...
I don't think there's anything particular about SBF that makes him more likely to re-offend (And even if he wanted to, one would hope he'd have a hard time convincing folks to hand over another 8 billion for him to embezzle a second time).
Which isn't to say that I don't think he should go to jail (he definitely should!), just that I don't think he's any more jail worthy then people who engage in other forms of non-violent theft and/or fraud.
I'm not disputing that he's committed fraud, but I think that a lot of his followers can do a lot of mental gymnastics and convince themselves that he never actually did anything illegal, in no small part because he's never directly been convicted.
His corporation was given the death penalty for wildly overstating the value of assets.
The other figure that comes to mind is Adam Nuemann (and I'm not alleging anything criminal against him), but apparently he just has a personality that draws VCs with dumptrucks full of money like moths to a flame.
Clearly people just have tons of money they don't need these days.
Just to be clear, I think he's a moron and a fraudster; even if you could prove that Trump University and the Donald J Trump Foundation and the hoarding of classified documents and the collusion with Russia was all hogwash, the fact that he didn't divest himself from his businesses after assuming power should be a bright red flag to people.
[1] https://www.nbcnews.com/politics/white-house/federal-court-a...
I tend to be pretty far-left (at least by American standards), but some of the "Bernie Or Bust" rhetoric has gone a bit crazy sometimes; I don't think Bernie Sanders is nearly as horrible as someone like Donald Trump (I voted for him in the primary in 2016), and I certainly don't think he's an outright fraudster, but I do feel like he (and his followers) kind of cozy up to demagogue-adjacent language as well.
I think people really really like the idea that one magical person can and will solve all their problems.
But that's about as far as I'll go towards partisan politics since I don't want to get hellbanned.
I've long worked with and even dabbled a bit in sales (which would have shocked a young hotpotamus to learn - it's basically the opposite of my natural inclinations). I was quite bad at it myself - I would often try to explain nuances to people and how they need to invest in their own skill as well as buying a good product. Salespeople who promised them simple solutions that would solve all their problems were far more successful, which was a bitter early lesson for me.
What rankles though is that Trump is so transparently a buffoon - I can't believe it works for him.
Yeah, this is (partly) why I was not a good professor/teacher. I don't think I was horrible at it, but I have a very strong compulsion to mention every bit of nuance in what I'm talking about. Sometimes that can be a good thing, but when a student is trying to learn introductory programming, getting into the weeds about how the textbook is "basically right but kind of simplistic because in this case..." really is not the right approach for teaching freshman students. I grew a new respect for teachers who learned to suppress those instincts and teach the simplified stuff.
I almost think that Trump being an idiot works to his advantage. He's so utterly stupid that I think he's completely unburdened by any kind of nuance, and as a result it's very easy for him to speak authoritatively about everything, no matter how wrong he is.
SBF went on many podcasts and interviews, and instead of showing even the slightest hint of remorse, he instead denied everything, blamed everyone but himself, then pleaded ignorance, all while also claiming that he probably won't be charged with any crimes. I recommend looking at CoffeeZilla's coverage on this.
We can find plenty of examples of convicted conmen that manage to get funding again. Off the top of my head, the wolf of Wall Street himself, Jordan Belfort, was convicted of securities fraud, spent almost two years in jail, was banned from any kind of stock trading, but now promotes all kind of cryptocurrency and multilevel marketing scams.
There are certain behaviors in fraudsters that make me think they are psychopathic fraudsters and really incapable of dealing with the world without deceit. That naturally overlaps other dark triad traits that make it hard but not impossible for someone to put aside deceit and allow some deflation of their ego, etc.
No? Not the alleged (and very convincing) parent involvement? The total lack of remorse and continued denial? The latter is typical for fraudsters, but the former is pretty particular to SBF, and definitely would incline someone to be a repeat offender imo.
Now obviously, I'll fully acknowledge that it's not completely apples to apples; there almost certainly a million differences between the US and Scandinavia that contribute to differences in crime statistics, but I think it does demonstrate that reducing emphasis on punishment doesn't turn the world into this post apocalyptic dystopia.
> More than 60 people died in shootings last year in Sweden, the highest figure on record.
This may be a lot of people for Sweden (~0.5 death per ~100K people); it's not a lot of people in the general sense. Per [1], 19,000 people died from gun homicides in the US in the same year (5 per 100K people). Not exactly a sign that Sweden's system is failing relative to the US.
[0] https://apnews.com/article/sweden-shooting-explosion-deadlie...
[1] https://publichealth.jhu.edu/2023/cdc-provisional-data-gun-s...
Anyway, bringing up Scandinavia as one unit doesn't work anymore when there's such a big difference between Sweden and for example Norway where restorative justice is still successful.
How sure are you of that? It's easy to get lost in the weeds, but looking at similar timelines and similar definitions of what constitutes recidivism, the US compares favorably to Sweden [0].
Worth noting is that the data is very noisy. You'd expect that recidivism would be monotonically increasing with years post-conviction, but it varies quite a bit year by year so this is not what the statistics show. This noise also makes it pretty easy to cherry pick numbers to suit your argument.
[0] https://worldpopulationreview.com/country-rankings/recidivis...
https://www.svt.se/nyheter/inrikes/nio-av-tio-gangkriminella...
90% recidivism rate. Scandinavia is not a success story anymore.
Punishment has three purposes: deterrence, incapacitation and retribution. The first two are simple. The last seems irrational. Yet if you ignore it, you wind up with people executing a parallel system of justice (i.e. taking matters into their own hands) and generally losing trust in society.
Within the category of crimes that maximise the need for that last element, it’s wide-scale actions that harm a lot of people, visibly, done by a member of or someone perceived to be proximate to the elite.
The sort of retribution that is like "X hurt me, so punish them" is the one everybody seems to no longer believe in, and that's fine. But there is another sense of retribution that I think is very valuable, which is "maintaining the status quo that people who commit crimes are punished for them". It's not personal retribution but more of a "belief that the system will handle retribution", and it is important because it helps us believe that there is a legitimate criminal justice system that takes care of justice for us and which we can delegate justice to.
You alluded to this in your comment when you said "losing trust in society". Mostly I just want to observe that to me it feels like it deserves a separate bullet-point instead of being lumped in with "retribution".
I thought similarly. But these are baked into our psyches. Jailing the drunk driver won’t bring back the dead child, but if you don’t do it there will be backlash. This sense is profound enough that we generally celebrate people who take justice into their own hands when they’re denied retribution through lawful channels.
If I were to cite one common failure mode of the last decades’ criminal justice reform efforts (in America, but coast to coast) it’s in attempting to rationalise away our social need for retribution. The key is in recognising that every exercise of justice need not satisfy all three facets. A remorseful defendant need not be incapacitated. And a crime with no human victim need not seek retribution.
In your belief it seems you discount the cost of "finding the root causes of crimes and taking actions to fix them" with the idea seeming to be that a greater good is achieved that way than through punishment. However, you fail to realize that there are very real costs to society for enabling this root cause analysis, to the detriment of our civil liberties. Every time you take off your shoes at the airport, you are being punished for someone else's crimes.
I prefer both
If prosecutors can show that actual malice and intent were part of his motive then logic would follow he'd get a Maddoff-like sentence. If he's just the worlds biggest bumbling idiot that people put too much faith and money in then it'd be lesser. I'm not quite caught up to when SBF knew he'd started a criminal enterprise versus when he was making reckless decisions.
20 yrs of work, savings, and TSLA + NVIDIA winnings gone just like that
It didn’t make any sense what ftx was doing at the time. It’s one thing to steal and embezzle, it’s another to rob the thing wholesale from top to bottom.
Its almost like someone schemed all this out, just to funnel people’s money to politicians
I’m afraid we won’t ever get to the truth of it, kind of like the Epstein case
Everyone agrees that FTX funneled money from FTX customers accounts to Alemada. The government is claiming this is fraud, SBF is claiming it was just allowing Alemeda to have more leverage than other clients.
Everyone agrees that FTX gave SBF's parents $30M in real estate. The government is claiming this was fraud, SBF is claiming that it was just payment for work done by his parents for FTX.
Everyone agrees that a large part of Alemeda's balance sheet were coins that only had value because they held almost all of them and only they transacted in them, thereby allowing them to keep the price high. The government claims this is accounting fraud and SBF claims this was just a bad marking of their price.
Everyone agrees that FTX bought around $100 million in Bahamian realestate. The government says this was stealing from FTX's customers, while SBF is claiming this was just to house FTX employees.
Everyone agrees that FTX paid $100's of millions to celebrity endorsers and arena naming deals. The government claims the source of these funds were customers money. SBF claims that both FTX's own cash and customers funds were just one big pool that he just didn't have enough accounting and risk management rules enforced on that large pool of resources to know that FTX ran out of money and he was using customers funds to buy things.
I'm not an expert in case law but one thing that stand out to me is just how many of SBF's "friends" and partners have fully turned on him and will testify against him. Caroline Ellison, the CEO of Alameda, Gary Wang, the CTO of FTX and Nishad Singh, FTX' engineering director have all signed cooperation agreements.
Also rumours are that SBF will testify, which short of Trump testifying , seems like the worst possible person to take the stand.
The winners in this will be the bankruptcy lawyers and people who had cash on had to buy FTX customer claims for 20-30% on the dollar. I think funds that had the forsight to buy these claims and create a side car for their investment will do very well.
The yield on this trade though will be determined mostly by the recovery rate and probably more so by the time it takes the lawyers to pay out claims as I've never met a bankruptcy lawyer who was in a hurry to part with the cash and lucrative billing rates they make.
One other thing i'm watching but not related to the trials is how far back FTX's bankruptcy lawyers go after people who withdrew money from FTX.
With Maddoff the bankruptcy lawyers went after anyone who took money out going back many years. Supposedly there were a few larger hedge funds who took money out of FTX weeks before it went under and stopped withdrawls. There is plenty of precedence for the trustees to go after those funds to ask for the withdrawls back.
I think you are ultimately correct that extraordinary incompetence would still be some crime. Question does seem legitimate that it isn't necessarily fraud?
Consider, if a bus system lets a genuinely incompetent driver on the street, there are all sorts of fines they will face. Rightfully so. Same for a hospital that has a genuinely incompetent doctor.
Now, if you are incompetent at things that are not your core competency, things are different. But, in general, incompetency at the level we are looking at here should raise as many questions on why so many others ignored red flags.
But, even if it is, that wouldn't excuse purposefully being incompetent.
So, your concern about this encouraging the appearance of incompetence feels off. You could maybe actually be incompetent, such that you would have a legal defense. However, if you are, how did you get to the point of causing harm?
A sibling post earlier pointed out that manslaughter is not murder. That is basically what I'm posting. Just incompetence to fraud, as manslaughter is to murder.
Does the existence of manslaughter pose a hazard of people pretending to accidently kill others? Maybe? But evidence is lacking that it is a major hazard.
When you are super guilty, that typically doesn't go well.
But who knows, maybe having his bail revoked gave him some perspective of how seriously he should take this and that he isn't a legal genius.
For a witness, this really just means more stress than you were likely expecting going into the process. For someone actually involved in the trial, I imagine it is everything multiplied.
Your lawyers can poke holes in the prosecution's case ("cast doubt" on it). Make it look like a weak case.
Getting on the stand and explaining an alternate timeline actually give the prosecution MORE evidence, from the horse's mouth. They can find new things you did wrong, they can find inconsistencies in your story, inconsistencies between what you said today and what you said last week. You're likely to commit perjury.
You're not expected to convince the jury of an alternate timeline, you just need them to NOT believe the very specific one the prosecution lays out.
A company giving money to the parents of the owner is fraud.
A company giving money to another company owned by the owner when not in their interests to do so is fraud.
A company giving customer funds out as loans is fraud.
Incompetence is not an excuse and never has been, just as ignorance of the law is not an excuse.
This is what banks do though, no?
FTX (excluding FTX USA co) were unregulated - they were not a bank or broker just a plain old LLC.
> A company giving customer funds out as loans is fraud.
No, this alone is no where near enough for fraud.
Banks do this all the time. So does anyone company that issues gift cards.
Not sure on the rules for banks but FTX was not a regulated bank!
FTX was not a bank, it was an exchange. People were not giving FTX money to lend out to others in exchange for interest (as they would a bank). People were buying products (cryptocurrencies) from FTX that FTX agreed to hold on their behalf. FTX doing anything with these assets other than holding them on behalf of customers is fraud.
FTX's own Terms of Service explicitly said it was not permitted to lend out customer funds.
SBF himself repeatedly stated that FTX did not lend out customer funds.
Depending on state law, if you put down a deposit for e.g. flowers, the florist is free to spend the cash however they see fit, including loaning it out to someone. Lending customer funds per se does not prove fraud. Bankman-Fried lying about it does.
No, they were accepting customers' cash in exchange for something undefined. Crypto being unregulated, we can conclusively say that something was not "purchasing and holding assets on their customers' behalf."
FTX is, in many respects, more like a florist than a financial firm. Certainly for purposes of this case. (My florist's books are better organized.)
One, it's unclear if that's criminal commingling versus breach of contract by FTX.
Two, that's what I mean--absent additional representations, the lending out of customer deposits on its own does not constitute fraud or even anything illegal. That's the point of the comparison to a florist. In terms of consumer protections, my deposit with my florist is about (albeit not precisely) on par with customers' at FTX's. This is what you get when you stick your finger to the regulated system and put your money outside it.
Which I understand as, it's gota be determined the extent of the lying to determine the extent of the fraud ; some you-didnt-read-the-contract-well-enough responsability may incumb on the customer(s).
holding assets on their customers' behalf
Who said he was, him?
Of course Im playing devil's advocate here to illustrate the logic of the law as presented by our friend here.
Do you know the particulars in this case? It doesn't look like the article covers that specific aspect and I'm not terribly familiar with this case.
None of those points are actually fraud on their own, except potentially one. The companies use of customers funds would likely fit the definition of fraud, this is unlawful gain.
A company can legally give out loans. Companies give out signing bonuses, salaries, gifts etc, the problem comes down to whether it fits the definition of fraud.
Edit: I am skeptical that that significant money will be recovered. Madoff ran a rather simple scheme where he skimmed money for himself and to pay earlier investors. I don't believe he actually lost that much money, just never made anywhere near the paper returns. I think FTX actually lost a lot of real money, but I am not that close to the facts.
Don't forget the fortune cookies. I know that I and some others on HN (https://news.ycombinator.com/item?id=33599123) never will.
For the crime that SBF is alleged to have committed, we can reasonably expect 20 yrs (he will be out in 10-12). But if he had committed a murder, he would be in prison for life (no parole).
Mathematically speaking, this implies that a life is worth more than fraud worth 8 billion dollars. We can make a very reasonable assumption that the govt can save 1 additional life using a million dollars (giving necessary treatment to drug addicts / suicidal people / etc). Out of the 8 billion dollars from SBF, government would have got at least 50 million dollars from taxes (this is a lower bound). Out of that 50 million, maybe the govt puts 10-20 million back for public good. So the govt could have saved at least 10-20 people from the money that SBF is alleged to have defrauded.
Based on the above, can we say that SBF indirectly killed 10-20 people? What would be the punishment for someone who kills 10-20 people? Surely more than 20 years.
This balance between the scale of crime and the severity of punishment can be very interesting. Should someone defrauding 2 billion dollars suffer twice the punishment of someone defrauding 1 billion dollars? What about 2 murders to 1 murder? What about numbers on scale that can change an economy (what SBF did)?
More fundamentally, is our legal system scalable?
People aren't money but money can be converted to saved lives.
For example, how did you determine that he’d get about half of a 20 year sentence? Particularly given federal crimes require a minimum of 85% time served.
Is this just your feelings disguised as fact or is backed by anything concrete?