SBF Arrested by Bahamian Authorities | Hacker News Reader

SBF Arrested by Bahamian Authorities

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Much sooner than I expected. Figured it'd be a couple of years before the AG was secure enough in their case to bring charges. This is MUCH faster than Madoff or Holmes.

Then again, he's been much more out in the open about everything. He pretty much laid the prosecution's case out to the public for them.

It's clear Caroline Ellison has turned against him. Stephanie Avakian, former SEC enforcement chief, is representing her in NY. I'm guessing they wouldn't have been able to file charges this quickly without Caroline becoming a cooperating witness.

Maybe they don't need a cooprerating witness or special deals. Apparently the companies were really badly run, with lots of clear-cut violations, making it very easy to file charges.

From The Verge article about the arrest of Bankman-Fried ( https://www.theverge.com/2022/12/12/23506483/sam-bankman-fri... ) :

John J. Ray III, who has taken over for Bankman-Fried as CEO of FTX and whose credentials include supervising the corporate cleanup after Enron imploded, has already said, 'Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.'

If the charges include manipulating the prices of TerraUSD and Luna earlier in the year - that ironically probably caused the FTX implosion, it's hard how to see Caroline Ellison as head of Alameda wasn't heavily involved in major criminal activities.

https://www.nytimes.com/2022/12/07/business/ftx-sbf-crypto-m...

Getting one of two culpable people to testify against the other and let them off the hook seems a dreadfully lazy approach to prosecution.

I remember there was a picture of her in a NYC Starbucks in the past week. Someone predicted she had made a deal with DA and SBF would be indicted soon. Now it appears the prediction was spot on.

Can you explain what makes this so clear?

Hm... does that mean she gets away scot-free? Not sure that's fair, she seems very complicit.

Nit: Madoff was faster, but that's because he confessed everything to his children.

> A spokeswoman for Mr. Bankman and Ms. Fried wouldn’t comment on whether they are giving their son legal advice. Their friends, some of them legal scholars themselves, have said Mr. Bankman-Fried’s frequent media appearances are a mistake that could put him deeper in legal jeopardy. “They want him to protect himself, and he won’t,” said Larry Kramer, a former dean at Stanford Law and longtime family friend. “They’ve decided, ‘We’re not going to fight with our son.’”

From the WSJ:

https://archive.ph/2022.12.12-111902/https://www.wsj.com/amp...

SBF literally stole billions from a bank account. Not a very subtle crime.

I imagine SBF constantly confessing crimes into a microphone accelerated the timeline a little bit.

People were mad that he kept getting invitations to speak, but I bet all those interviews and comments show up in evidence.

I think SBF made it too easy and the fact that he has been on a media frenzy trying to play innocent here must be a slap in the face to the AG.

I kind of had hopes the Bahamas are moving fast. As a tax haven, and arguably black money haven, you cannot have people abusing your lax financial regulations by stealing other peoples money, can you? After all, all the money people are parking at your banks teust you that it will still be there later. Also, in order to keep your freedom you have to keep the US authorities, and the EU, of your back.

Still surprised they moved that fast, I thought they'll wait for a demand from the DoJ.

Edit: According to vice.com, the US asked for his arrest.

False.

Madoff was arrested before the news broke.

And Madoff was more out in the open. He confessed everything to his sons, and the very next day he was arrested.

> This is MUCH faster than Madoff

Madoff was less than 11 days after discovery of his fraud:

https://www.theguardian.com/business/2009/mar/12/bernard-mad...

Though I assume that if the suspect is abroad and seemingly unwilling to travel to the US, the DOJ would likely try to secure their return early, vs a person of interest in the US, who would be told to not leave the country during the investigation.

Madoff confessed and was arrested immediately. SBF confessed and went on a PR tour for a month

The Zoom calls he did where he pretty much confesses to defrauding customers didn’t help.

I hope this is a lesson to those who think they can just talk their way out of things. The moral arc of the universe is long, but it bends toward justice.

When in deep shit, keep your mouth shut. - not SBF

Madoff was arrested within days.

How is it faster than Madoff? And it's far more complex than Holmes.

After adjusting my tinfoil hat, I can only conclude this is to preclude any direct testimony tomorrow. If he’s going to talk to the US authorities, the Bahamians are going to be the mediator.

It’s the day before he’s supposed to testify before congress.

It's Bahamas, not the US. He could still be prosecuted here for crimes committed here.

It was fast because https://www.youtube.com/@Coffeezilla already cross-examined and rested his case to the public, see https://youtu.be/4o_jPzBZSIo

I no nothing about law, but I can imagine the pressure on Southern District to act after the cast was outlayed so well in social media.

Inevitable, but a lot of talking heads used the delay after FTX's collapse to sow doubt about corruption, media failure, etc.

Feds were probably gathering evidence from Day 1, and the restructuring CEO seems to have found it: https://docs.house.gov/meetings/BA/BA00/20221213/115246/HHRG...

FWIW, most of the presige media (NYTimes, WaPo, WSJ) have been running puff pieces which parrot SBF's claims of ignorance without much if any fact checking or investigation.

I'm not sure reporting that Alameda + FTX had little to no financial controls, terrible accounting, and unaccounted for deposits is really puffery, unless you stretch the definition. And I've seen stories about SBF spending FTX money on personal loans and Bahamas real estate all over the legacy media. Even the restructuring CEO couldn't account for all the lost funds until recently

The Times and Washington Post perhaps but I haven't seen any puff pieces from WSJ about SBF. In fact quite the opposite. The WSJ seems to be decidedly anti-crypto. The most recent piece concerning him before this announcement was titled:

"The Rise and Fall of Respectability":

https://archive.vn/AiEEO#selection-109.5-109.40

Do you have specific examples? All of the organizations you mentioned have covered his companies in very unflattering terms.

WSJ did? Citation? They seemed super critical from what i saw.

Can you show an example of one article that is a puff piece?

How/why is this dated December 13, 2022?

It’s a statement submitted to the record for a Congressional hearing tomorrow.

Seems SBF won’t be attending after all…

It's the testimony they are going to read tomorrow. It's a good idea to have something prepared so you don't stumble over yourself like SBF is everytime he speaks.

The document is from the future, obviously.

I skimmed the entire document and didn’t see any new information and in particular i didn’t see any evidence of a particular crime that could be pinned on SBF, other than negligence. (I’m sure he’s guilty of many crimes, i just didn’t see new evidence in this document)

This is his intro statement to the Congressional Committee. One wouldn't expect that it has much new, and given his role as "repo man", it wouldn't be focused on SBF's specific crimes, but on what he can do now to clean it up. But the tone is absolutely damning and it's clear that he is saying that illegal shit went on.

Some news on what he's being charged with:

> Damian Williams, the U.S. Attorney for the Southern District of New York, said on Twitter that the federal government anticipated moving to “unseal the indictment in the morning.” The charges include wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering, according to the New York Times, citing a person familiar with the matter.

> Meanwhile, the Securities and Exchange Commission has initiated a separate set of charges against Bankman-Fried, relating to “violations of our securities laws, which will be filed publicly tomorrow in the Southern District of New York,” enforcement director Gurbir Grewal said in a statement.

Source: https://www.cnbc.com/2022/12/12/ftx-founder-sam-bankman-frie...

This is good for Crypto. Seriously. Because SBF is probably going to help the US make their case against Binance and that will flush out all the bad actors. Many coins will go to zero. The entire ecosystem will wither and die, but if Crypto survives it will be because there is some fundamental value to it besides digital beanie babies.

Illegal transactions and money laundering isn't going to disappear. A generation of engineers obsessed with crypto will not suddenly stop caring even if a bunch of coins go to zero. The potential prize (control of a global currency/commodity) at the cost of just writing a bunch of code is too potentially lucrative to make people stop trying.

If you flush out all the bad actors there is really nothing left. It will survive because there are enough bad actors to last forever.

"flush out all the bad actors".

Bad actors will keep on existing as long as crypto is useful, which it will remain for the foreseeable future, specially considering the ever more restrictive personal banking regulations.

But, it doesn't, so it'll die! Which is the best possible outcome.

In the absence of regulation, fraud is a comparative advantage. We can point to specific instances of fraud as moral failings. But fundamentally, if people are incentivized towards fraud, then there will only be fraud.

If you flush these particular bad actors, others will simply take their place

New bad actors will replace the old ones, this has all happened before, this will all happen again. Replace SBF with Mark Karpeles and the discourse is exactly the same, except at least back then the critics didn't have a legacy of fraud to point to.

Do you think crypto is still gonna go survive as an investment asset and maybe go up?

It actually might be regulation that kills crypto because once you take out the high risk, you take out the high reward as well, and people are only in crypto for the high rewards

And that fundamental value? Allowing a currency for people to sell drugs and other illegal goods online.

Why is Binance bad?

your imagination is too wide.

This flush out theory is so funny.

First because it seems that everything needs to be flushed out. FTX was highly regarded. Binance is the largest exchange. What shouldn’t be flushed by that logic? Bitcoin? Maybe Ethereum?

It also makes a weirdly naive distinction, between the « good actors », people who are selflessly coding and building things for the good of humanity (and who also don’t exist), and the « bad actors », who are there for hidden motives.

Why is crypto the only place where people make this distinction? We don’t make it for banks, or coffee shops, or car makers, with fantasmatic and ephemeral « good actors» (where nobody agrees on which they are) and bad self-interested bad actors.

And secondly because it doesn’t work like that. Bad things don’t get flushed until the good remains. Newer bad things come and replace them, on and on, until things get regulated.

I see a lot of people saying that they think he'll get off or get a slap on the wrist. But I think that misunderstands what happened here. SBF perpetrated a massive fraud for years. In order to put him in jail prosecutors don't need to prove that. All they need to do is identify a small handful of actions that count as wire fraud and prove those cases. The saying is "Don't break the law while you're breaking the law"- there is simply no way that SBF was competent enough to actually carry all this business on without fucking up enough to incriminate himself, and now every single dollar that he transacted in this last 5 years will be under a fine tooth comb. To say SBF won't face jail isn't to say he's going to get away with his massive fraud, it's to say he'll also get away with every tiny fraud he committed along the way, and there's just no chance that's the case.

For all the struggles facing the democratic world, it's nice to know there is a stream of justice that prevails.

In certain other large counties, this man would either be protected or jailed depending on what party he aligns to. Sure, you can say the same for USA, but with far less immediacy. Over time things tend to sort themselves out.

A lot of the money that was lost came from institutions and some public funds as well. Ontario Teachers’ Pension Plan, BlackRock, Circle, Sequoia Capital, Binance, SoftBank,...

SBF is a crazy character, he somehow must have thought he was above it all. If he'd done what all these finance companies do, scamming the little man, he'd probably still be free. Alex Mashinsky yet has to be arrested for example. And people like Vladimir Tenev aren't even prosecuted, many of them get off with a slap on the wrist.

Don't feel bad for Blackrock/Sequoia/Softbank etc. These are professional investors, yet they invested in a finance company that didn't even have proper financial sheets. To let that slide is pure negligence, and, frankly, should put them on the hook for the monetary loss from the FTX customers.

Tell that to Assange.

Assange assisted with criminal activity. It would be cool to see it argued in court but somebody seems hell bent against examination.

True. But again, Assange isn't without a voice and some level of due process.

Compare that to being vanished, and/or having your family roped in.

SBF's public conduct over the past weeks, and alleged conduct over the past years, reinforces an image of unintelligence. Be it genuine stupidity, stimulants or both, he isn't top-of-the-doghouse material. (Granted, easy to say ex post facto.)

The elephants in the room are Binance and Tether, together with certain high-profile investors. Taking some of these out could likely be worth a plea bargain. (For optics, he has to go to jail. But sending him to jail for a long time while letting the others go free for lack of evidence is a bad trade.)

My opinion is that it's all faux stupidity. I think his whole "I really didn't know what was going on" spiel is going to fall apart quickly in court. Anyone with a couple brain cells to rub together would know to shut the hell up. He seems desperate enough to try lying and manipulating his way out of hot water. That's what his whole media tour has been about. He's not giving interviews to people that will give him tough questions and follow up on his responses. He's giving interviews to people that are going to ask "so, what happened?" And follow up his half-baked response with "Wow, you didn't know what was happening, that's wild!"

He’s even more stupid than the stupid guy he pretends to be. What kind of criminal talks to the media about their crime before their trial?

The fact that he’s done this would give his stupid guy story credence... if there wasn’t already a boatload of other evidence that he’s a conman.

It’s a little bit innocent to think that SBF isn’t intelligent; he’s extremely adept at lying and manipulating. And on top of that, intelligent enough to create a large crypto exchange. It’s his morals and impulses that got him into trouble.

He’s the latest example of why many RPGs have separate stats for intelligence and wisdom. He’s clearly not stupid but his lawyers must be sitting at their desks sobbing “stop giving interviews!”

I think that this illustrates the problem with EA's consequentialist worldview. You can justify pretty much anything if you do the math right.

He could be intelligent but distressed (who wouldn't?) or he could be just a front for more sinister people.

> Binance and Tether

Binance is the elephant in the room. They might have their finances in order, however. The fact that they were enabling shady deals doesn't mean they were cooking their own books. For Tether, I think it's more solid than you think. These guys have been cooperating with NYAG from day one.

It is a feature of social media society that there is such a large body of actual evidence ex post facto that is so damning. I am thinking of SBF tripping on stimulants on meet the press, the CEO of a multi billion $ hedge fund talking about how many of their investments were scammy.

Yet these raised no red flags, and were even cited as proof of their genius, how this time it is different - you can pitch at a 30bn valuation while tripping on drugs and playing a game at the same time. Genius (or Idiot?)

Anything less than 20 years will be a joke.

He is intelligent enough to understand what he's doing and he's going to jail regardless of optics.

All the separate companies plus the code that hid transactions speak to much of the conduct being intentional, no?

I can’t wait until tether finally implodes. That will absolutely destroy the crypto market.

Being intelligent at math is quite different than handling a crisis well. IMO he's spent the last few years with everyone sucking his nuts and going on about how smart he is and it's gotten to his head.

For those saying "what took so long?", this is incredibly quick. It's still quicker than I thought it would be. But it is an open-and-shut case. As soon as you steal custodial assets (meaning customer assets that you'r eholding in trust), it's game over.

Additionally, the US claims jurisdiction on pretty much anything that touches the US financial system. It's how the US can exert pressure on, say, European banks (eg the Swiss settlements for withholding taxes for US citizens).

Given the scale of the fraud (ie $billions), I honestly expect him to spend the rest of his life in prison. It's that large and that egregious. Was it worth it?

I'm curious to find out if Caroline Ellison was (or will be) a cooperating witness in this case as some speculated when she was spotted in a Starbucks recently in Lower Manhattan close to the SDNY office.

> I honestly expect him to spend the rest of his life in prison

Yeah a lot of people are saying this and citing Madoff for comparison. I guess we'll all wait 2 years and see, but I doubt he's getting this kind of time.

How similar can he make his story look to Nick Leeson's? He'll say he just got in over his head, tried to trade his way out of it, used funds he shouldn't have and lost in his gambles. Leeson got 6 1/2 and served 4. My prediction is SBF gets 11 and serves 7 or so.

Having "Wirefraud" as the name of your group chat on Signal is something that the prosecutors are going to love when proving intent...

Couldn't find a reference for that specifically, but, damn, girl.

> me: how do I signal my genuinely sweet and feminine nature on my dating profile? should it go before or after the section on wire fraud

https://caroline.milkyeggs.com/worldoptimization/index.html

Date: 2018-04-01 01:00:31 GMT

https://www.afr.com/companies/financial-services/ftx-s-inner...

He didn't actually... did he?

Your honor, it was a VPN fuzzer...

The same thing happened during the LIBOR scandal, which was much bigger.

Chat was named “the cartel”

Ended up being a slap on the wrist and the public collectively forgot the largest financial scandal in history happened.

I'm eagerly awaiting the LegalEagle video on this. I'm doubtful it's actually as bad for him as it looks to the uninformed observer.

He will go with the "it was just a joke" defense

I imagine when authorities found about it, they must have laughed at this for days.

This article has some context, including this part about possible penalties if found guilty:

> Legal experts told CNBC that if the federal government pursues wire or bank fraud charges, Bankman-Fried could face life in prison without the possibility of supervised release. Such a severe punishment would be unusual but not extraordinary. Ponzi scheme mastermind Bernie Madoff was sentenced to 150 years in prison, an effective life sentence, for his massive ponzi scheme. ...

https://www.cnbc.com/2022/12/12/ftx-founder-sam-bankman-frie...

Madoff got a long sentence, but lets not forget that 'legal experts' were predicting a pretty long sentence for Elizabeth Holmes, too, based on federal formulas. It's optimistic at this early stage to legitimately expect SBF to get life behind bars.

Holmes got 11 years in Federal prison for her first offense for financial crimes.. that is a long sentence. SBF obviously won’t get life behind bars, nor should he.

I guess this means he wont be testifying tomorrow ?

https://techcrunch.com/2022/12/12/sbf-scheduled-to-testify-t...

He refused to testify shortly before the arrest https://www.cnbc.com/2022/12/12/former-ftx-ceo-sam-bankman-f...

Is there anyway the arrest is in response to the refusal to testify? Or just coincidental timing?

Maybe this was the only way to ensure he testified

They have teleconference phone in jail. He can still do it.

My only regret about this is that we won’t be treated to an absolutely bonkers House committee hearing with Sam this week.

I still think it will be pretty bonkers. Someone else posted FTX's restructuring CEO's opening statement for tomorrow morning, https://news.ycombinator.com/item?id=33962193. With comments like the one below, I'm interested to see how many bombshells are dropped:

> Nearly all of these situations share common characteristics, ranging from gross mismanagement, excessive leverage, failures of internal controls, failures of external checks as a result of audit firm failures, or insufficient board governance. But never in my career have I seen such an utter failure of corporate controls at every level of an organization, from the lack of financial statements to a complete failure of any internal controls or governance whatsoever."\

That opening statement is remarkable. Thanks for sharing the link.

He may never see the world outside of a jail again.

Most white-collar criminals are released on bail. But after extradition, it's different.[1]

"The Bail Reform Act ... and the attendant presumption in favor of bail for persons facing trial, apply only to criminal defendants and are inapplicable to fugitives facing extradition proceedings. Because of the potential harm to the country's international relations that could result from flight, there is a presumption against bail in international extradition cases"

This is a downside of operating offshore to try to evade regulation.

[1] https://www.justice.gov/archives/jm/criminal-resource-manual...

That’s about fugitives being extradited from the U.S.

Hence the mention of international relations.

1. Incorporating a company in another country and abiding by its rules and regulations is not and should not, in and of itself, be considered "evasion" of US regulation.

2. The US has refused to draft clear legislation regarding how to operate a crypto company in the US, effectively forcing all interested parties to take the route described in point 1.

New York State licenses crypto companies.[1] There's a list of the licensed companies on that page. It includes Gemini and Coinbase.

A crypto company could set itself up as a stock broker/dealer. Robinhood has done that.

There's clear legislation. It's just that the marginal players don't like it. They wouldn't get past the initial requirements.

[1] https://www.dfs.ny.gov/virtual_currency_businesses

He is not a fugitive. There was no warrant out for his arrest until now.

Those are, I think, unrelated sentences.

"fugitive" assumes he is/was 'running from the law', which I don't believe he is/was.

> There was no warrant out for his arrest until now.

I think there was, if not in the United States then in the Bahamas. From https://www.wsj.com/articles/ftx-founder-samuel-bankman-frie...:

> FTX founder Sam Bankman-Fried has been arrested in the Bahamas after the U.S. filed criminal charges that it expects to unseal Tuesday morning, the authorities in the two countries said Monday evening.

Sounds like that clause applies pre-extradition, not post.

It's not even as if he was good at it, the scamming. It's like a three stooges, slapstick approach to financial fraud. He went to MIT for God's sake, he could have done something positive and meaningful with his life but instead chose this. So much opportunity cost lost here, we could have built a few bridges and rail lines, done real work with the money he burned.

Money is literally just a number, a fiction. What we must mourn is the expenditure of time of brilliant engineers and people, that wasted their productive years on this foray. However, humans waste tons of time... even the most intelligent among us. I would not say this is a tragedy of great sorts, and for a guy who was working at Jane Street, I don't think SBF would see this as an opportunity cost... it's more like he played the game and lost. Lost badly.

Agreed. I've worked on two multiple year projects with hundreds to thousands of engineers working on each, only to have them thrown in the garbage. It's highly depressing how many person hours of some of the highest educated and valuable skillsets we have are just thrown away.

This is just a repeat of financial scams that existed a hundred years ago, now it’s just being done with digital money.

Not learning from the mistakes the first time and allowing history to repeat itself for no reason is the tragedy, IMHO

I'm not for the US.

Does being from MIT actually mean anything?

In my country we don't really have a university that people would great about or that would how any special status, at least not that I would know of.

Imagine a university that every Venture Capital firm in Silicon Valley looks at and goes "That guy must be good, he dropped out of MIT". It's not only that MIT is a good university, it's that it quite literally opens doors to hundreds of millions of dollars if you choose to build a start up.

It's a highly respected engineering and science university, one of the top handful in the country, and world.

I am from India (and never been to US). Even in India, people recognise MIT as the best institute all over the world. It does carry very high brand value. Even for me, if someone has done STEM studies in MIT or Stanford, I'd value them very highly.

Or they could fund the war on Afganistan for few days/week? I like how nobody mentions real trillions lost there for no REAL REASON. Not even counting casualties.

Let's just keep being irrational. We are just writing comments, not sharing real information.

People mention it all the time (you just di). It's just not what this conversation was about.

I remember reading here (on a previous article about FTX) a comment that said SBF had friends in the Bahamian government, or something like that, so no way he'd get extradited to the US. I found that... pretty funny... at the time, and seems like I was right.

Why would the Bahamian government risk their relations with the US over someone like SBF? Kinda absurd...

In addition, the type of “friends” he had in the government don’t stick around once you stop being worth a billion dollars.

The conspiracy theorists and professional cynics have been out in force. The reality of the situation is, SBF is so widely despised by the voting public that an example of him must be made, and any supposed power that SBF had through his political giving and connections was not close to enough.

What is Crypto if it's not a business entirely driven by cynicism and conspiracy. It was literally born from the 2007-8 financial crisis. Everyone is viewing this in the context of no one facing any consequences for that.

Guess that's one way to get out of testifying before the US Congress.

It is specified in the document that they will extradite him to the US

No, it says the US is likely to request extradition - but has not yet. SBF was scheduled to appear remotely (Zoom or similar) before congress tomorrow.

It also says the US has filed criminal charges, which is the first I'm hearing of this.

As an aside - anyone else think it makes congress appear weak to still be allowing people to remotely testify? They supposedly are the most powerful and important legislative body in the land, perhaps the world - yet they can't compel people to show up in person and treat the event with the deference it's supposed to deserve?

Can they simultaneously criminally charge him and force him to testify before Congress without violating his 5th amendment rights? I think getting charged criminally does get him out of having to testify to Congress, or at least it should.

Yes but will they do it in a handful of hours?

This post from ~4 days ago seems like it has been vindicated ahead of schedule: https://news.ycombinator.com/item?id=33908577#33909017

About time. Hope the rest of FTX and Alameda folks responsible also face criminal charges.

There are a lot of people responsible because of things they did but also a lot of people responsible by being quite negligent.

Actually more than the people who perpetrated the fraud, I hope the people who casually let it happen while doing none of their job to prevent it… I hope those people see real consequences.

There are always going to be cheats and bullshitters, our first line of defense against them are the people who are supposed to be reasonable just saying “no” to the dude sucking at League during a pitch.

Alright, well, now that that's done - let's go find all those people in the past threads who were saying things like SBF will never be arrested.

I remember a lot of people strongly believed that SBF would never get in trouble because he was a Democratic donor, and that this was all part of some vast corruption scandal.

It turns out not everything is a conspiracy.

Those people: “We shone a light on the corruption and forced their hand”. /s

Heh this thread is full of them https://news.ycombinator.com/item?id=33909017

What I found funny about that kind of attitude is less the conspiratorial mindset but more the weirdly gullible perception of the world of crime.

People who are willing to be bribed generally tend to lack integrity and loyalty, so if you ever think that handing a corrupt person money is going to protect you once you turn from an asset into a liability with no leverage, stay out of that world. Which is probably what SBF thought too, which is why he was a really shoddy political operator and white collar fraudster with a very short lifespan.

Reminds me of the times other HN threads were full of people saying tick tock is perfectly safe and does not send all your data to their servers, hahaha.

"they only prosecuted him because they don't want to look guilty for taking his bribes".

I wasn't one of those people, but they definitely had history on their side. Nothing seems to escape prosecution in the eyes of the public like financial crimes.

Where "past" is about two hours ago.

No, look forward and get Binance and the Tether guys.

Want to save the world?

Figure out a way to make be accountable for the stuff they type online.

I confess. He must be out of (stashed) cash. That is totally insane.

Arrested is great progress. Now lets see him convicted and sentenced, and ideally not allowed to suicide his way out of the process.

What do you think should be done to them once you've found them?

What a time for Popehat to quit Twitter: https://popehat.substack.com/p/goodbye-twitter

He is on Mastodon and Substack and certainly bringing his timely and usual joy to the former.

So now I’m wondering who else will SBF take down with him. There is a pretty good chance he has knowledge of similar situations in Binance or Tether. This should be an interesting trial.

> I haven’t seen any evidence Alameda itself committed any crime

Three very rich crypto millionaires (or billionaires?) have died mysteriously in the past weeks. One, 30 years old, in his sleep. One in a helicopter which blew (not far from where I live) after a mysterious passenger cancelled his flight at the last minute. And another one who drowned (after having tweeted that "they" were after him).

If SBF has dirt on people, I think there's a very real possibility he got the message clear.

who?

Source?

As an aside, isn't it a little weird for a legal document such as this to use his initials over something more formal like "Mr Bankman-Fried"?

It's not a legal document, it's a press release. There will be legal documents involved in the arrest but we're unlikely to see them.

OK sorry bad terminology. Nonetheless from a legal authority. The SEC's press release (https://www.sec.gov/news/press-release/2022-219) is much more in keeping with what I would expect.

About time. Ellison needs to go down with him. She's complicit as much as he is.

His parents are law professors, themselves with hundreds of millions they must have gained from their son's activities. We know that they have at least 10s of millions of dollars in real estate to their names.

The probabilty that it's hubris, stupidity or privilege (all suggested in these comments) causing these interviews is less close to 1 than the probability it's a tactic to portray himself as a distracted lunatic with no notion of what happened under his watch.

It’s probably another case of Hanlon’s razor, “don’t attribute to malice that which is adequately explained by stupidity”.

> hubris, stupidity or privilege

Narcissism, there's a lot of that going around these days.

Since everyone is making predictions, here's mine: He'll get a slap on the wrist, do some community service, and be free to go on a lecture circuit at state colleges across the land, donating some of his second wealth to charities of his design and choosing, in an act of humble penance that will sway the hearts of the people.

Extremely unlikely: I think % chance of him going to prison is close to 100%

Why did he stay in the bahamas? Was he allowed to travel?

I can't imagine why he wouldn't flee. If i was committing ~9 figures worth of fraud, I would have huge stashes of 1oz gold bars buried in countries without extradition like Vietnam and venezuela. He seems like he had no exit plan thought up.

Madoff got 150 years in prison, and i dont see any reason why SBF would get any less.

According the US Dept of State[0], Venezuela has an extradition treaty with the US, apparently since 1923.

All North and South American countries do. All Caribbean countries too. Even Cuba.

Parts of Africa and Asia look pretty safe. Madagascar is nice this time of year.

0. https://2009-2017.state.gov/documents/organization/71600.pdf

He didn’t expect himself to fail or see himself as nefarious enough to have an extradition free life planned if things failed.

People aren’t cartoon villains, and the speculation about “what I’d do if I were Al Capone” or whatever are just silly fantasy.

This is bank fraud, not a heist, also much different than Madoff.

> can't imagine why he wouldn't flee

He lost the locals' money too [1]. They weren't letting him go anywhere.

[1] https://www.bloomberg.com/news/articles/2022-12-12/bahamas-p...

> Madoff got 150 years in prison, and i dont see any reason why SBF would get any less.

I actually see one: SBF mostly mishandled unregulated magic beans on an unregulated exchange (FTX.com).

The unregulated magic beans on the regulated exchange FTX.US are still there, waiting for withdrawal, according to his tweets.

US customers weren’t even allowed to register on FTX.com, which was outside the US.

Anyway, he still kinda defrauded Sequoia and friends, who didn’t buy magic beans but actual shares of the FTX exchanges (not sure about whether .com, .us or both)! But maybe he still gets less than 150 years..

This is the guy that's bragging about committing fraud on live interviews... even after the screwup he didn't have the wherewithal to have an escape plan.

Then again, realistically a disappearing act of this magnitude would likely require access to a lot of trusted people to pull it off. Plastic surgery, boat captains, someone to plant false leads, security, etc.

You'd have to be able to get to Vietman or Venezuela. I'm guessing he was being watched like a hawk. They could have arrested him at anytime, but having more evidence before an arrest is always a better position.

> If i was committing ~9 figures worth of fraud,

If you committed a billion in fraud, you probably wouldn't be shitposting on Twitter or giving interviews that made a prosecuter's case easier, either.

Guess what, you're smarter than this dude.

Nan, you probably would not. Do you have somebody in Vietnam or Venezuela, with a small army of mercenaries, and that you trust enough to hide those stashes of gold ?

That might be the inexperience. He used pretty much every outlet out there to talk about his story and what really surprised me was the naïveté of SBF and Caroline.

It's an island. Tough to get off even if not arrested. I'm sure if he tried to get on a plane all kinds of "problems" would have appeared (computer not working, ...) If he tried a boat, "oh look, it's leaking oil, we can't let it leave and pollute the waters".

Bahamas will have absolutely not let him get out of their sight. They have so much egg on their face.

I can even see the titles if he left "Did he bribed Bahamas officials to look the other way?" ...

It is an island, and it's not that hard to get on a boat and sail away. Carlos Ghosn was able to be smuggled out of Japan on an airplane while under house-arrest. I imagine Japan is much, MUCH, harder to be smuggled out of than the Bahamas :)

Surely he had enough money to order a private jet or yacht or both.

> Why did he stay in the bahamas? Was he allowed to travel?

He answered this question at the beginning of this interview:

https://www.youtube.com/watch?v=zGNiYt1GN_4

"from my perspective, it's not about looking to go home.... this is were I've been running FTX from.... there are still things that need to get done."

Seems a bit ignorant of politics. For instance he planned to travel to Dubai which would obviously extradite him. Silver spoon son of Stanford profs probably thought his donations made him invulnerable. Thankfully it’s embarrassing enough to the right people that he is wrong.

Maybe he was scared he was going to get arrested in the US?

Is it a good reason to stay in a country that has an extradition treaty with the US?

From blockchain to chains and a cell block.

Sam Bankrun Fraud Chained to the cell block

Given some of the details such as:

1.No accounting department or compliance staffs at both FTX and Alameda 2.$6billion spent and yet FTX and Alameda combined never made over $2billion in total revenue.

Someone obviously become an informant, probably CE given her 2018 comment about wire fraud.

Just think about this, all the influencers that got paid have to now give that $1billion back as it was proceeds of fraud conveyed. So those who lost money will get 1/8th of their money back eventually.

Surprising amount of support for him in some of these comments.

Now we'll see if having both parents who are Stanford Law Professors, and possibly many other legal minded connections, will save him from going to jail.

Per today's WSJ article, they're currently in the Bahamas with him.

https://www.wsj.com/articles/sam-bankman-frieds-parents-were...

His father was a paid employe. Quoting the WSJ article about his parents:

"Joseph Bankman and Barbara Fried remained by Mr. Bankman-Fried’s side—as legal advisers, one person familiar with the matter said, but mainly as parents to a son who is in deep trouble.

Before FTX’s collapse, Mr. Bankman was a paid employee of the company for almost a year. He joined his son in meetings with Washington policy makers, expanded its philanthropic endeavors and helped connect his son to at least one major investor. And when Mr. Bankman and Ms. Fried visited their son in the Bahamas, where FTX is based, the company provided a place for them to stay."

Wouldn't you be with your child when the world media is talking about him? They are not teaching at Stanford next year anyway.

Paywall workaround for the above WSJ article: https://archive.ph/20AU0

Given they were recipients of stolen funds, they are witnesses, if not unindicted (so far) co-conspirators.

His parents do the PR tour, I doubt they can help him at this point.

Interesting timing, he was supposed to testify tomorrow before the House, albeit remotely. My understanding was that there were two scheduled hearings, one for the Senate the House, today and tomorrow respectively. You would think the DOJ and congress might communicate on such matters. Why wouldn't the DOJ have waited a couple more days? Flight risk?

I did not expect charges to be formally brought against him this soon.

The AG must be confident that they have enough to win a case. That was quick.

-- should be interesting - watched all of his interviews - if ftx usa is fully solvent and no mingling was done on the US accounts - and those trading on the other exchanges had a different TOS with clauses related to margin accounts - very curious to see what happens - very small chance he wiggles off the hook - maybe? --

These were all lies, per Ray's house testimony [1]. FTX US had no sound financial controls keeping it isolated from the rest of FTX.

[1] https://docs.house.gov/meetings/BA/BA00/20221213/115246/HHRG...

-- my reading of this is only that the business empire as a whole was poorly managed - ftx.us was included in the ftx.com bankruptcy to avoid a run on the bank - if they were trying to avoid a run on the bank - wouldn't it further indicate the ftx.us platform indeed had funds? - most of this document is concerned with ftx.com not ftx.us --

Just one day before the hearing at the US house? very interesting. Why not let him talk if he was going to incriminate himself more? Somebody sure didn't want him to talk tomorrow...

Apparently he was not going to testify.

https://www.cnbc.com/2022/12/12/former-ftx-ceo-sam-bankman-f...

That article says he was scheduled to testify before the House ("Bankman-Fried is scheduled to appear at a House Financial Services Committee hearing on Tuesday that will focus on his company's collapse") while refusing to testify before the Senate.

Whatever, he's been talking plenty in Twitter Spaces, pretty much confessing to co-mingling funds.

> Whatever, he's been talking plenty in Twitter Spaces, pretty much confessing to co-mingling funds.

None of that was under auth.

"the prosecutor: but you said this on Twitter?"

"SBF: I was no longer the CEO of FTX and I was just kidding".

Or the feds knew he was secretly planning to flee or something else. Hard to tell.

Though I do wish he had testified and further incremented himself.

> Though I do wish he had testified and further incremented himself.

    SBF += 1;

But HN told me he wouldn't since he bought the politicians!

I see a new song coming: Bahamian Rhapsody

"Mamaaa, life had just begun, But now I've gone and thrown it all away"

What are people like him risking their freedom for? Who is the beneficiary? Where has the actual money gone?

Did he not sell his crypto in the Bahamas as well ?. The old adage of don't shit where you sleep or eat.

Well, thought this would take months to years, but happy to be wrong.

Looking forward to the perp walk and orange jumper.

Timing of his arrest is a bit suspicious. Tomorrow SBF is supposed to testify before Congress [0] and his arrest by Bahamian authorities is a perfect way to make sure that the testimony will not happen. Coincidence...?

[0] https://news.ycombinator.com/item?id=33957542

Or, the call for congressional testimony made sure they knew where he was.

Or even more likely: the committee had no idea what the executive was doing.

Hopefully all his fellow colluders will also go to jail. He didn't do this single handedly.

The timing of this is interesting, on the eve of SBF testifying before Congress.

Maybe someone thought it would be nice if SBF spent xmas in a Bahamian prison.

He claims he cares about the people of the Bahamas. The fact that his father is a tax law professor and the country where they located is a tax haven is pure coincidence, of course. When he was handing out donations in his fake "effective altruism" campaign to ensure he and other crypto crooks could keep breaking the law for profit without being seriously regulated, he may have forgotten about all the people in Bahamaian prisons who also believe they need to break the law for profit. This is a great chance to bond with them during the holiday season.

The quality of the prison conditions should be commensurate with the amount of taxes paid to the Crown. It is a nice lesson in "utilitarianism".

"The arrest came as Bankman-Fried prepared to lash out at his former lawyers at Sullivan and Cromwell, new FTX CEO John Ray and rival exchange operator Binance at a U.S. Congressional hearing.

In the testimony, a draft copy of which was seen by Reuters, Bankman-Fried planned to say he was pressured by Sullivan and Cromwell lawyers to nominate Ray as CEO following the sudden exodus of customer funds. And when within minutes he changed his mind, following an offer of billions of dollars of fresh funding, he was told it was too late.

It is unclear, however, whether Bankman-Fried will get to testify."

https://www.cbc.ca/news/business/ftx-bankman-fried-arrested-...

https://www.forbes.com/sites/stevenehrlich/2022/12/13/exclus...

To read the transcript as a PDF:

   tnftp -4o 1.jpg  'https://imageio.forbes.com/specials-images/imageserve/639819b415bec55a96620eb9/Screenshot-2022-12-13-at-1-20-27-AM/0x0.jpg?format=jpg&width=960' 
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I find it interesting that this legal letter used the initials SBF.

I wonder if this is because he is incorporated in the Bahamas. May be in the US it would have taken for ever or may be never. Bahamas probably had a reputation to uphold and so arrested him. I mean, moved fast and arrested him.

Not sure if satire…but they arrested him due to a pending extradition request by the US.

Hard to imagine the timing of the arrest being coincidence.

About time. Turns out Bahamas is not much of a safe haven.

All country that have an extradition treaty with the US are not safe havens for any kind of federal (US) crime. That's the whole point of the treaty. Someone didn't do their homework, but given that someone is SBF, not particularly surprising.

SDNY isn't to take lightly. Likely 25+ sentence.

where is caroline?

Now for the rest of the cronies and hangers on.

In the absence of consumer protections in crypto it seems the authorities want a high profile trial to send a warning to others and to would be crypto "investors".

He's fried.

It is a good first move to arrest SBF, but nothing will happen if the rest of the team has already left the Bahamas or gone untraceable.

Going untraceable is the stuff of novels. Pulling that off in the real world is almost certainly well beyond the abilities of any of these individuals.

Odds on him getting bail?

everyone enjoy your Stanford or elite school education!

Can't wait for the trial now.

He will walk free!

bankman to jailman. It was a nice ride!

Why only now?

Dog bites man

This case will test whether the US is a country where bad deeds have bad consequences. Over the past decade I have become increasingly skeptical that our society is able to hold the wealthy and well-connected to account, but perhaps this case will prove me wrong.

You'll be happy to hear that the US holds wealthy people to account all the time. You'll be sad to hear that that's only true when their victims are other wealthy people.

lets goooo

My first thought - “hell, it’s about time” see https://youtu.be/_J6-3l3hCm0

https://news.ycombinator.com/item?id=33962116

We merged that one hither.

Nice to see one of the wealthy set getting their comeuppance. Rare, but satisfying.

I found it funny that people wouldn't stop going "why is Elizabeth Holmes sentenced to jail while SBF roams free??". The Theranos fraud started in the early 2000s. The company imploded in ~2015. Holmes and Balwani were charged in 2018. They were finally tried and sentenced in late 2022. And the saga will likely continue with appeals. And all of this happened double quick as far as the justice system is concerned.

The FTX saga has been going on for a few weeks now. Keep that popcorn away and wait.

Honestly, one of my concerns is that a figure like SBF has one similarity with Jeffrey Epstein - both was/are highly connected individuals. I fear waking up one day to the sudden reveal of SBF's "long hidden battle with depression", before a strange last-minute relocation, then another strange event, then...

My gut feeling is that SBF won't rat-out any corruption that goes way up to the stratosphere of US politics, and instead will try to go for a deal, perhaps even help with investigations into Binance etc., however my concern is another time where we don't get true justice (the facts become public knowledge, fair trial, etc.).

Next few weeks and months are going to be interesting, I think.

EDIT: Some downvotes, so just wanted to elaborate: Nowhere did I say that the alleged criminal acts of SBF of JE are "comparable". To say that is an extremely gross and unfathomable misunderstanding of what I was saying.

I am comparing their involvement with politics and political figures (unequivocally), and noting how both have either alleged or proven to have been involved in illegal activity. I feel like it's a pretty important and note-worthy point to make, but YMMV.

However, I understand that my wording could have made that more clear for everyone. I apologise for that. Sorry.

As much as I think cryptocoins are stupid, to compare a literal child rapist and someone who ran a crypto exchange (even fraudulently) is completely beyond the pale.

See edit. TL;DR: Nowhere did I say that the alleged criminal acts of SBF of JE are "comparable". To say that is an extremely gross and unfathomable misunderstanding of what I was saying. I'm not sure why you would do that, to be very honest with you.

There's no direct evidence that Epstein was murdered.

He is more like a Bernie Madoff than an Epstein.

Bernie Madoff was a bit before my time. Was he heavily involved with politics/political figures, to the degree of SBF?

Will people please stop calling this cretin by his cutesy name. This aura of personality over details of the operations of is a tell of a scammer.

So then what's the problem?

because, as the cryptocurrency fanatics are so fond of saying, "Few understand this."

rip in peace kid. Hope the League games & amphetamines were a few lifetimes of fun.

rest in pieces in peace?

thats dark.

Here lies SBF

Magnate of coins

Hooverer of phet

Legend of League

Pinner of weasels

How do you know that he wasn’t capable of understanding those requirements? It seems just as possible that he consciously chose to ignore prudence in favor of easy profits.

In fact, it seems that he completely did understand the importance of things like separating customer funds between businesses given that FTX claimed to have rigorous procedures around this prior to their collapse. From the outside, it appears that he is trying to save his skin by pleading ignorance.

> He was clearly naive and not capable of understanding and implementing the full legal requirements of his business.

Why? Why was SBF naive versus knowing and not caring? He is an intelligent man.

If I invest in something that ends up being a fraud I should not just lose my investment but face criminal liability?

What

Lol, he knew exactly what he was doing. And the investors were just FOMO’ing into it.

Conveniently before the congressional hearing.

"Please arrest me so I don't have to testify at the US House hearing tomorrow"

Smart-ish move, tbh.

Say it with me:

Blockchains mathematically prevent fraudulent misuse of deposits

Yes, on/off ramps are an issue.

Yes, blockchains do not prevent physical threats of violence or profound custodial negligence.

No, SBF would not have been able to defraud millions of depositors on a blockchain where everyone self-custodied.

Hardly anybody wants to self custody. It's the literal reason banks got started. If blockchain can't even solve the most basic use case of the financial system, it's not going to replace it.

I'm not claiming banks don't serve a good purpose.

I'm not claiming anyone should hold all their net worth on a blockchain.

But blockchains do have extremely desirable properties in preventing fraud _on the chain_.

I would love to have mathematical proof that my government is not fraudulently misusing my tax dollars, at least at some level. Who wouldn't?

I would love to hold some portion of my assets in a way that no one, even the government, can seize it or freeze it. What if my government is Cyprus in 2013? What if my government is the 1940s Nazi government? I want to be able to flee the country without losing my livelihood to tyranny and abuse.

> Blockchains mathematically prevent fraudulent misuse of deposits

> SBF would not have been able to defraud millions of depositors on a blockchain where everyone self-custodied.

Does the TerraUSD count? People self-custodied, but the blockchain was built in such a way that it went to 0 easily enough.

Was that profound custodial negligence? It seems like blockchains that fail in such a way are a dime a dozen, and the end result doesn't seem vastly different from "$company running $TKN has gained a lot of money, and all the holders self-custodying $TKN have lost practically all their money even though $company assured them $TKN was safe". Is that any different in a useful way from "FTX has gained a lot of money, and all its customers have lost practically all their money which the company assured them was safe"?

Practically every crypto "pump and dump" follows this scheme of a custom token ('blockchain' if you will), a company saying it's not a pump and dump, and users self-custodying right until they lose all their money.

Perhaps blockchains prevent "fraudulent misuse of deposits", but enable "users exchange money for $TKN, which is definitely 100% worth something, and then it isn't", which really seems quite similar to me.

How were deposits fraudulently misused on Terra?

Sure, it blew up. We should totally criticize Terra for that.

But it succeeded in preventing Do Kwon and everyone else in the entire world from fraudulently misusing deposits.

You wrote valid criticism of blockchains, but you failed to state how SBF could have done what he did on a blockchain where everyone self-custodied.

Say it with me:

Blockchains never had a chance. It was designed to be a ponzi from the start. If you took it as something more than that then the joke is on you.

Please don't start this hellish, repetitive flamewar up again. The ongoing SBF hellthread is bad enough as it is.

https://news.ycombinator.com/newsguidelines.html

https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...

Tell me specifically what is false about this statement:

Blockchains mathematically prevent fraudulent misuse of deposits

How does NYT feel about interviewing him literally not more than two weeks ago and trying to frame him as a super smart kid making a dumb mistake?

> How does NYT feel about interviewing him literally not more than two weeks ago and trying to frame him as a super smart kid making a dumb mistake?

If you're referring to Andrew Ross Sorkin's interview of SBF, you're misreading the larger editorial framing of that interview.

The editorial intent was to get SBF talking and present, in public, evidence of whatever he did or did not do. The motivation of that interview was not to provide a platform for his exculpation.

Consider, for example, Fortune's analysis of that interview, which begins [0]

  > Where to begin? In a decade of covering crypto, I’ve seen a lot of
  > strange spectacles but nothing quite like Sam Bankman-Fried’s interview
  > at the New York Times DealBook Summit—a 45-minute display of delusion
  > and sociopathy in which the disgraced FTX founder whined, wheedled, and
  > did everything but acknowledge his responsibility for the financial
  > crime of the year.

[0] https://fortune.com/crypto/2022/12/01/sam-bankman-frieds-big...

As a journalist you ask tough questions and demands answers.

Stop being a NYT apologist.

Sorkin threw softballs at SBF again and again, accepted answers given without an iota of concern about the bold lies spewed back, profusely thanked SBF for being so generous with his time over and over again as if it's the NYT that somehow stole billions and tried to lie and get away with it.

Friendly reminder that he could not have stolen the deposits in the manner he did if this was on-chain and the users self-custodied.

Yes, DEXs exist. Yes, you can self-custody on DEXs.

That’s equivalent to saying if a bank goes insolvent you should’ve had your money in a safe at home.

For crypto yes you can have a hard wallet, but it can still be stolen from you without anyone physically touching your hard wallet.

I don’t and won’t see the appeal for crypto until it has a killer app that people NEED to use for another reason than “I can get rich quick”

You seem to be under the naive assumption that dexes are safe from what I can only call "Blockchain shenanigans". See:

Exhibit A: https://rekt.news/madmeerkat-finance-rekt/

Exhibit B: https://rekt.news/monox-rekt/

Exhibit C: https://www.coindesk.com/tech/2022/11/02/cross-chain-dex-rub...

Or do you want me to find a few more examples before you stop spreading misinformation?

Nobody can steal your FTT tokens either.

Hopefully we will see this as a powerful turning point, heralding an end to cryptocurrency, with all its false promises of financial utopia.

Turns out it was nothing more than a series of scams, and the ensuing court cases will prove this beyond a shadow of a doubt. This entire edifice will come crumbling down, and take this entire sordid industry with it. One can hope.

> false promises

I hear your anger, but consider that this is the one financial system where self-custody is an an actual workable option. You can't store 100M USD under a mattress. You can't deploy large amounts of cash without permission from governments. In the US, banks have to report transactions over $600 to the IRS.

That said, use Monero. It's the only one of these things that protects privacy.

You're misinformed.

Depositors were stolen from because they did not self-custody.

You can't take someone else' funds on a blockchain, except by physical threat or profound custodial negligence.

Time to put all these frauds in jail and wrap up the crypto saga. Good practical demonstration why regulation and traditional finance work the way they do.

He could not have stolen the deposits in the manner he did if this was on-chain and the users self-custodied.

Yes, DEXs exist.

Also the enforcers are compromised including SEC chairman Gary Gensler

https://www.foxbusiness.com/markets/sec-chairman-gary-gensle...

https://www.dailymail.co.uk/news/article-11438875/Questions-...

https://moguldom.com/427483/is-sec-chair-gary-gensler-compro...

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