FTX Has Billions More Than Needed to Pay Bankruptcy Victims
bloomberg.com
bloomberg.com
"If a thief steals money, takes it to Las Vegas, and earns a handsome profit by gambling, he is still a thief, even if the funds are repaid." [1]
[1] https://www.thedailybeast.com/ftx-crypto-fraudster-sam-bankm...
SBF's crime wasn't losing money, had he gotten authorization to make these investments from his depositors, he wouldn't have been in this position.
Crypto could easily have crashed. And then...?
Sure, those gains can be used to make investors whole. No, SBF shouldn't get any credit for his "foresight" because they can.
There was a point within a couple of months of the Madoff collapse where it was shown that if he'd sent out an email to his investors saying, "Here's the deal, we're freezing. No more deposits. No withdrawals for now", and he'd left everything untouched for four years, he would have been in the black. His efforts wouldn't have been right or net-zero if he'd done that, though.
I guess this is the point I was getting at, and I disagree with it. Even if you rob and kill 100 children, it doesn't invalidate the foresight.
Foreshight on a specific topic is a sperate topic and specific actions can be judged independently. IF SBF a bad person, but also says the sky is blue, that doesnt make it false.
[1] For clarity, what SBF did is not, I realize, theft. Just an example.
I'm talking about recognition that someone was able to make a correct prediction or calculation.
If someone is a mass murderer but invents cold fusion, You can hold both facts to be true. They made a great scientific discovery and that they were a killer. The facts are not in competition.
SBF may have had a good read on the market, and a good eye for investments. He may also be a criminal. Humans have multiple dimensions, so both can be true.
That's the "credit" part. No, he shouldn't. Crypto gains after the seizure of FTX funds are not of his doing, and shouldn't benefit him. Similarly, an argument can be made that he shouldn't necessarily have had access to some of the funds that he used for investment.
I'm not denying (nor much caring) that he has made some good investment choices.
>And even more, it was luck and 'fortune' that this is the case now. It's nothing of SBF's doing. They're only able to be made whole because of the market. Crypto could easily have crashed. And then...?
If you arent addressing this point, you are in the wrong part of the threaded conversation.
What I am saying: SBF should not be able to get his sentence reduced because he made good investments with ill-gotten funds. Whether he is capable of that or not is immaterial.
The market continued to rise after he ceased to be involved with those investments. Why should he reap the benefit of good fortune (indirectly, in reducing his sentence) because of that rise? It had nothing to do with his intent for that money - his intent was generally to enrich himself, family and friends, and if others got the leftovers, lucky for them. Hence the three private jets he owned. Saying "well, he made some good decisions so there's more to pay people back with, so he should get less jailtime" is BS, to me.
I think that it is fair to recognize that SBF/FTX selected some wise investments, and I dont think that was all pure luck.
Im not trying to make any wild claim beyond that about morality, you are the one bringing that into it.
The operating model of a bank is to take depositors money and loan it out at a higher interest rate; Then there are investment banks that "hedge risk" and seek higher return ratios - ie what happened to Bear Stearns in 2008 (a reminder that nobody went to jail for 2008).
> Although all debts will be paid in full, plus interest, nothing will be leftover for equity holders
> Depending on the type of claim they hold in the case, some creditors could recover as much as 142% of what they are owed. The vast majority of customers, however, will likely get 118% of what they had on the FTX platform the day the company entered Chapter 11 bankruptcy.
My exposure was pretty small, definitely not enough to justify trying to figure out this whole process would work in my case.
NO. THE ANSWER IS NO.
It my understanding (I could be wrong) that on financial crimes it does make a difference if you make the victims whole or not. No idea if it also applies somehow after the ruling, hence why I asked on this forum for intelligent discourse. Sorry if that bothers you, though.
Breaking and entering is a crime on its own, while most financial crimes are non-violent by nature; a whole different set of rules apply.
Burglary is also different from fraud. Read about it, I can recommend a dictionary.
If not, the person doing the B&E gets a lighter sentence, but they still get punished.
> Depending on the type of claim they hold in the case, some creditors could recover as much as 142% of what they are owed. The vast majority of customers, however, will likely get 118% of what they had on the FTX platform the day the company entered Chapter 11 bankruptcy.
If you had 2 bitcoins worth say 16k each in FTX; FTX is able to give you back 32k which is the value of your bitcoin at the time. (~Nov '22). But it's not giving you back 2 bitcoins (120k; presently).
Same with if you had Solana which was $13 (~Nov '22) but is now $148.
As someone who has been convicted of a financial crime (theft of funds from an association account due in part to a gambling addiction).
The key word in your statement is "YOU". My sentence/deal involved restitution from my own funds. If I'd taken some of the money I took and put it into crypto, that would be -used- to make my victims whole, but it wouldn't be considered me making recompense, because the money I put into crypto would have been ill-gotten, and as such any gains were not mine to give.
That very much made a difference to the discussions between my attorney and the prosecutor.
While we like to think of the law and its application as a dispassionate process that only looks at the facts, the sense that someone has been harmed plays a big role in the process and jury decisions.
This development weakens any arguments around harm to others, it could also strengthen arguments in favor of incompetence as opposed to malfeasance when it comes to explaining what actually happened to investor money.
* Some FTX investments, in particular Anthropic, have done very well over the past 2 years.
* Due to the mechanics of bankruptcy law, FTX's cryptocurrency liabilities were effectively converted to dollar liabilities when they filed, meaning that all crypto price increases since then are free money for the asset recovery. (You could reasonably frame this as bankruptcy victims not really being made whole, since their claims are substantially less than what FTX would owe them if it were still running, although there's good reasons it works this way.)