Hacker News Reader

I think both interpretations are true. I think he did think they were so brilliant and novel that they could ignore the rules. I think it's reasonable and probably legally correct to interpret that as fraud (with self destructing messages being strong evidence of mens rea). I think he really didn't intend for things to go wrong. I think he probably thought "we're all gunnuh make it," or "(3,3)" as Levine describes it in today's Money Stuff. I think now that everything has collapsed, he's trying to weaponize his rationalizations to maneuver himself into a better position (nonspecifically, there's no plan he's just trying to see what kind of better position is possible. I provide some admittedly sparse evidence for that here [1]).

In order to lie convincingly, you must first lie to yourself. His method is a sort of "sincere bullshit." That excuses nothing but is necessary for a complete understanding of the story.

SBF wasn't an exit scammer, or he would left with the money much earlier. He wasn't a Madoff character, or he wouldn't have attracted so much attention. A better comparison is Holmes. They were both looking to build an empire and probably believed they would eventually make good on all or most of their promises. This is a really dangerous form of con artist, because they can take in everyone - the greedy who want to ride the hype, the optimists who want to implement the vision, the desperate who need to believe in something, we can all fall for this sort of thing.

IANAL

[1] https://news.ycombinator.com/item?id=33910390

I agree. It wasn't very complex, he made a bunch of basic mistakes that nobody with even a passing familiarity with finance should have made, and to say that he should have done better is an understatement of almost comical proportions.

I just also think that these things were (at least initially) due to absurd levels of hubris and incompetence rather than outright malicious intent. The guy thought his shit didn't stink but anyone even vaguely paying attention could smell what was up from miles away. He still doesn't think he did anything wrong other than making some justifiable mistakes in his rush to build something great and surely anyone can see that if he just explains himself for the thousandth time.

It is complex, but that doesn't mean it's not malicious. Let's use a simpler example.

Sam runs a horse racing operation and allows you to place bets on horses. Before the race begins, Sam collects $1,000,000 from various people placing bets on the race. During the race, Sam runs across the street to the casino and puts the $1,000,000 he's holding on black at the roulette table. If he wins the bet, Sam plans to take the $2,000,000 back, pay off customers at his race track, and then walk away with an extra $1,000,000 in his pocket.

Unfortunately, it comes up red, and Sam walks out of the casino with nothing. Realizing he won't have money to pay his customers back, he tries to find someone who can buy his race track and take on the debt, but nobody wants to inherit a $1,000,000 debt.

This is malicious. Sam willfully defrauded customers. Yeah, it could have worked out, but it didn't, and nobody consented to risking their money on the roulette table.

Now change $1,000,000 to $10 billion and replace "race track" and "casino" with complex finance mumbo jumbo.

Sure. This is a reasonable analogy.

I simply think that he started from an a priori belief that a) he is brilliant, and therefore b) ideas he comes up with are similarly brilliant, thus c) this idea is brilliant.

It wasn't.

That said, I don't think it should matter whether or not he came into this plan with an intent to defraud or if he mistakenly thought this was a foolproof investment strategy. The man is guilty as all hell and ought to face consequences for the outcome regardless of intent. I just think it's amazing to watch him continually try and explain how brilliant and complicated this idea was and how a few small mistakes brought him down while it's actually pretty simple to understand at a high level what happened and this outcome was virtually guaranteed from the start.

You see the same thing with most con-men (and women) when someone finally pulls back the curtain. Most won’t admit they were doing anything wrong even once they are in prison.

Near as I can tell, it’s the rationalizing part of the mind trying to protect them by trying to convince themselves and everyone else they are actually not bad.

It’s why it is so important to ignore what people say, and look at what they are doing and the results of their actions over time.

I have to add a preface of this is my opinion, but -

I think it's impossible he didn't know he was committing fraud. Now he's playing dumb, but I've know at least two people in situations like this. One was doing super risky real estate stuff which blew up in a surprisingly similar way - maniacal plans for world domination, mansions, lots of cocaine and adderall, sex with the co-workers, tons of leveraging, the whole thing. He was absolutely thrilled by the schemes and knew they were illegal. Ways to increase and manipulate the leverage was the daily conversation!

I know it's just an example, but this is all SBF would be doing all day besides press - talking about the funds and what they're doing with them. People imagine CEO's as being insanely busy and it's true, but there wouldn't be a day that passed that he wouldn't be making decisions with the finances - where they're going, what to do, etc. He's lying about dashboards and not knowing.

Smart sociopaths will convince even themselves it didn't happen when caught. Don't buy it.

I just also think that these things were (at least initially) due to absurd levels of hubris and incompetence rather than outright malicious intent.

Is there really that much of a difference between these two in this financial context?

I don't think it matters from a justice perspective.

From the perspective of someone watching the crypto world discover failure by failure why the modern banking system is the way it is this particular situation is amazing to witness. Everyone believes they're a genius when line goes up. Line goes down and everything falls apart.

As has been said before, once you reach a certain level, the two often become empirically indistinguishable.

Woah source needed on the Snapchat for company messaging. I gotta see this.

> Ray said that “one of the most pervasive failures” at FTX’s main international exchange was the lack of records about decision-making. He said that Bankman-Fried often used messaging platforms with an auto-delete function “and encouraged employees to do the same.”

https://arstechnica.com/tech-policy/2022/11/new-ftx-chief-sl...

("Snapchat" - the specific brand - may be inaccurate. I've seen it reported as messages that "auto-delete" without a specific platform mentioned.)

prob Signal

I heard they used Signal, which can have disappearing messages