Sam Bankman-Fried Convicted
nytimes.com
nytimes.com
https://www.nytimes.com/live/2023/11/02/business/sam-bankman...
So... money laundering?
SBF is a dumb criminal, who then screwed over everyone he abused into creating this theft. I honestly can't imagine many easier setups, less sympathetic defendants, or parades of pissed off co-workers willing to put the knife in him before he got it in them.
> SBF did not have any intention of committing a crime.
His fraud started early on, and he used the same tactic over and over again. He lied to his customers about how their funds were held, then abused them whenever any problem involving money came up in his life. Least self aware villan ever created.
At the end of the day, the defense had an unwinnable case. Their defendent is an idiot, and all of his co-conspirators plead guilty to all charges.
> Several of Bankman-Fried's previous defense teams quit on him
I remember SBF told someone at some point during his ill-advised media tour post-collapse, that his lawyers could "go fuck themselves".
But I was wondering what happened then with said lawyer... Is there a list somewhere of the teams that quit?
https://en.wikipedia.org/wiki/Withdrawal_from_representation
Even though this wasn't necessarily a moral issue, it did almost cost him his job and marriage. He didn't get the energy he wanted, but he did get rage issues. I kept trying to point this out, but he just wouldn't listen. He never admitted he was wrong about using T, however he was forced to quit using it.
It feels quite classically narcissist to me. I work for one. I'm not saying that lack of moral compass and narcissist are identical traits, but there are similar issues.
And as someone working for that sort of personality, I go through a simple reassurance process every day: have a lost sight of his true being (narccissist) or am I all the sudden calling him brilliant, drinking the cool-aid, saying I love him.
Luckily, I'm firmly grounded that I know who/what I am getting when I speak with him but talk with folks all over the company that are on the other side. It's amazing to hear it. SBF was that CEO and unfortunately, in my view, most of his folks were in the kool-aid/love-you camp.
To add to the parent post that had this: > It is extremely difficult to represent someone who thinks they did nothing wrong
It's extremely difficult to work with someone who thinks they can do no wrong as well. I try hard NOT to be that person.
No differences were observed between exercising and nonexercising and between placebo and [600mg test-e] treated subjects for any of the 5 subdomains of [Multi-Dimensional Anger Inventory]That’s one of the reason that transgender treatment is so insidious. Give a depressed teen girl testosterone and they will always feel incredible. Regardless of whether it’s actually a medically necessary treatment, it’s a treatment that makes you feel good. Psych meds can’t compete.
What does testosterone have to do with a moral compass?
But two points remain. 1. Had they been able to sustain this Ponzi scheme to IPO, he would be celebrated as a tech-god, as opposed to facing hard time. 2. The VCs aren't required to disclose their sales of crypto. My guess is they made money of this clown, directly at the expense of all the FTC users he fleeced. As long as that keeps happening, this sort of thing will never stop.
I've always felt this was probably the case. Take an idiot that needs to feel important, tell him he's a "boy genius" who can do no wrong and is always going to be misunderstood, and you basically have the perfect patsy. Till the end SBF just could not let go of that idea that he was smarter than everyone else, never realizing that this was always just a marketing gimmick.
At least Caroline Ellison had the sense to realize that she was living a delusion and quickly did what she could to walk away with minimal harm done to herself. In a few years she'll probably find herself making book deals and getting paid outrageous consulting fees once memory fades enough.
Like Jordan Belfort of Wolf of Wall Street infamy, or Andy Fastow of Enron. Why shouldn't she get in on the action? American publishers love a comeback story.
Take an idiot that needs to feel important, tell him he's a "boy genius"
I know very specific reasons people think Musk, Jobs, Gates, Zuck, and others are geniuses even if I don't agree in every case.
But... SBF? What did he even allegedly do (or preside over) that seemed smart or unique? It was... a crypto exchange. They had their own coin. Uh. Those are not unique things. I don't get it.
But your comment made me think. Maybe it was just an empty bubble of perception. VCs pretended he was a genius so they could use him, and told everybody he was a genius, so everybody thought he was a genius even though nobody could point to why they thought that way.
[0]: https://web.archive.org/web/20221027181005/https://www.sequo... (wayback machine is needed because sequoia has taken it down)
He had a pedigree, I guess, and made some... money doing the arbitage thing. But also a lot of people do that? There seems to be no real intrinsic reason why this guy would be seen as a star.
I guess it was just kind of a "right guy right place right time thing" thing.
I'm reminded of the Johnny Carson line after dealing with crazy entertainment types: I'd give my bottom dollar for a regular person right now.
SBF founded FTX in 2019 when he was ~27 years old. At that point he had gone to MIT and done some arbitage stuff. More than I've accomplished but I mean, I'm not really seeing anything that ticketed this guy for stardom.
By age 27, Jobs had founded Apple Computer and was one of the major players in launching the whole personal computing industry.
I don't think highly of Elon Musk but I have zero difficulty understanding why people would think he's a genius sort of guy and give him money. Even I have to admit he's been at the helm for some wild achievements. Also certainly a charismatic guy in some ways. Not going to have a shortage of money thrown at his next venture.
But SBF?
Again... what was anybody seeing in this guy? Must have just been "right place right time" when the crypto hype wave was cresting.
He was also surfing high on his messiah complex with a kind of 2020’s version of white man burden which the public was enamoured with.
To what extent were SBF and Ellison tech though? This trend of labelling more or less any new company that attracts VC funding as tech is bothersome. It's the mental loophole that allowed Adam Neumann to embezzle huge amounts of investor money too (but he did it "right" so gets away with it), by claiming that WeWork wasn't just an office leasing company but a tech platform. None of these people are engineers of any kind, none of them have developed any kind of new tech. They are just ordinary business types who run a business that happens to employ a few coders.
It is fair to call FTX and WeWork tech companies because they built platforms, powered by the internet and apps to modernize legacy offline industries. That's been the definition of a tech company since the 90's dotcom boom.
You can make a cryptocurrency without creating any new tech whatsoever. And you can create a blockchain without creating crypto.
FTX was just an ordinary financial company, AFAICT. It had a bit of software to run the order book, but wasn't run by technical people, had no R&D effort and no obvious reason to develop one, and so on.
WeWork was just a company like any other, I can't see a single factor that could make this be a tech company.
To me, at heart, a tech company must develop some new kind of tech and do so in-house.
You already mentioned WeWork. FTX is another example. Given how few "tech" start-ups and big tech companies actually produce technology as their core product, I guess the sentiment of SBF and FTX being somewhat symptomatic is fair.
But yeah if he hadn't been caught, he'd be doing well now.
And based the infamous Matt Levine interview, it was at best a legit ponzi exchange, according to what Sam himself says about the things being traded there.
The famous Matt Levine interview was about yield farming which as far as I know SBF didn't actually do but which he provided a striking explanation of. While that is Ponzi like it's a bit of a disservice to call it a Ponzi as it's actually rather more cunning and was the basis of most of the 'distributed finance' boom and bust.
then the IPO hits, you cash out, take your exit, and drink your mint julip or mojoto in Bermuda while the whole thing burns down 2 years later. whole lotta "not my problem" at that point, and every one would think you're a genius.
I feel like even very, very long into his prison sentence he's still going to try to talk your head off insisting it was all a big misunderstanding. And he's going to be denied parole because he's going to try the same thing with the parole board every time.
I've seen enough people like this in BigCos. Some of the worst offenders are a certain kind of ex-FAANG employee -- the super brash know-it-all who actually doesn't.
[1] There isn't really a clear definition of the term. I mean something like "people who call themselves effective altruists".
> movement exists for people who yearn to hoard obscene wealth to justify their hoarding retroactively
"Actions speak louder than words". "History shows us". Well, what actions and what history show that "effective altruism" exists for people who want to hoard obscene wealth and feel virtuous about it?
The founder of the movement, in so far as that's an identifiable single person, is William MacAskill. He (allegedly, but I've not heard any claims that it's a lie) donates everything he earns above the UK's median income, which is something like £26k/year.
(MacAskill surely deserves some criticism for helping to set SBF on the path he took -- so far as I know he didn't at any stage suggest or endorse lying, cheating, and stealing, but he did suggest something along the lines of "earn as much as you can and give as much as you can" and we know how that ended up. But I think we should distinguish "gave one person advice that ended incredibly badly" from "primarily wants to help rich people feel good about hoarding obscene wealth".)
Another candidate for "founder of effective altruism" is Peter Singer. He works as a philosophy professor, which I can't imagine is an especially well paid job, and I know he gives away a substantial fraction of his income. (He got a $1M prize not so long away and gave away all of it.)
Another is Toby Ord. Like MacAskill, he's set a not-very-high threshold and gives away any income he gets beyond it.
It doesn't seem credible to me that these people's intention was to help people justify hoarding obscene amounts of wealth.
So maybe the claim isn't that that was the original purpose of the movement, but is that that's what today's typical "effective altruists" want. I'm not sure how best to evaluate that. We could take a look at effectivealtruism.org and see what advice it gives -- does it say "you should get into a highly lucrative career and give a bit of money away" or something of the kind? Well, no. They say e.g. "A common misconception is that effective altruism is only about donating money to global health charities or ‘earning to give’. But community members support many causes besides global health, only a minority are prioritizing earning to give, and effective altruism is as much about how to use your time effectively as your money. In fact, the organization 80,000 Hours argues that for many people, their career decisions matter more than their decisions about where to donate."
There's an annual-ish "EA survey" (insert here all the usual caveats about surveys giving you unreliable and biased information) which suggests that between ~15% and ~25% of self-identified "effective altruists" think of themselves as "earning to give", which is what I would expect anyone to say who was in it to hoard obscene amounts of wealth and feel good about it.
Maybe I'm looking in the wrong places. What's your evidence (or callalex's) that EA exists for people who hoard obscene wealth or want to?
I am serious, you cannot make up that @#€&
Effective altruism is just a way for sociopaths to mask their actions while they burn down the world.
If SBF was born to an average family, none of this would have happened and he might even be a normal person, maybe a little cocky. Or he would be constantly struggling to live a basic life between jobs as he keeps being fired or let go for being insufferable.
I highly doubt he would have gotten into Jane street
To be fair, he was clearly quite smart. But...not as smart as he thought he was.
I'm not a doctor or a psychologist, so I'm not making a diagnosis, just offering the possibility that that may be what is at the root of the situation.
His parents are charged too, will they end up in prison?
Have they been criminally charged? As far as I know, they have only been sued by FTX to obtain money back.
I mean, they still have their jobs as law professors at Stanford.
One of the most fascinating takeaways I had from that show was the fact that he used to play the game Diplomacy with a specific strategy: he would intentionally make alliances with other players, then stab them in the back. He would do this over and over. Why nobody figured this out, I don’t know.
So when I go back and view his actions through this lens, it makes perfect sense.
https://grantland.com/features/diplomacy-the-board-game-of-t...
https://www.nolo.com/legal-encyclopedia/is-federal-parole-sy...
I’d guess that the defence team knew they’d loose and this was in some way the start of their sentencing reduction plan: “the money was stolen to cover mostly business losses and to keep FTX going rather than for personal gain”.
Fact is, this could have helped him and his company, eventually.
Another two or three years of very sympathetic (bought) politicians on his side and his business could have become legit as a result of those politicians forcing the liquidation/closure of almost all SBF's competitors (certainly Binance would have become bust), and the US "standing behind" FTX as a beloved crypto assed in the fight against China. I.e. very, very similar to what's happening now with AI and with people like Sam Altman.
Which is to say that I'm surprised to see that the defence hasn't pushed more on that "SBF was just a pawn in the hands of very corrupt politicians"-card, that could have worked given a politically divided jury.
For added chances of success also try to find some pro-Palestine social media statuses or anything similar just hinting to that in the past of the district attorneys and federal agency people who had anything to do with this whole trial, and this being the very liberal Southern District of NY of course that there are big chances for that type of content to be found, and in so doing further turning SBF into a political prisoner instead of just a money swindler.
That’s as good a strategy that he could have had given the circumstances, i.e. going for a future presidential pardon and turning his trial into a political case, because, technically, of course that he did all of those things and that by the rules that apply to big money swindlers he should spend the rest of his days mostly in prison, but that’s the whole thing, if he still wants to be free anytime soon his defenders should have turned this trial into something totally different than a big money swindler case.
Of course, that’s also how OJ got out of all the mess he had put himself into the first time around, i.e. because his trial had very rapidly turned into a political case, it was not about a murder case anymore.
> And what if he pulled a trump appointed judge who
Then go for the DAs and the federal agents.
Not saying that this would have worked (almost no-one was on Dreyfus's side at the beginning, apart from close family and friends), but it was one the best chances he could have had (on account of him being guilty).
Take from Tiffany Fong who was at the trial: https://youtu.be/wpKQWJFA3aw?t=850
To be fair to SBF's lawyers, you're going to have a hard time coming up with a good defence when your defendant is bang to rights.
Such a system would make it nearly impossible to proesecute the higher levels of a criminal enterprise.
It’s easy to prosecute the foot-soldiers of a criminal enterprise with outside evidence. The leadership of it typically requires testimony from others within the enterprise.
So, your approach of eliminating all benefits to criminal defendants for cooperating with the government would *massively* enable organized crime, and would end with a criminal justice system that comes down hard on the low-level members, while giving the organizers and planners a walk.
However, she was the principal co-conspirator, presiding over a bucket shop that drained 7 billion directly out of the accounts of FTX. As a Stanford finance graduate with trading experience, it's ridiculous to claim she was not aware of the "backdoor" source of Alameda's liquidity and the massive loses they accrued gambling with the money of FTX customers.
This is false. She pled guilty to wire fraud, conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering. The crimes she pled to carry a maximum sentence of 110 years. She was never charged with tax violations. She will receive credit for her testimony but she will certainly do prison time.
https://www.documentcloud.org/documents/23495753-caroline-el...
https://www.justice.gov/usao-sdny/pr/united-states-attorney-...
"Moreover, if the defendant fully complies with the understandings specified in this Agreement, the defendant will not be further prosecuted criminally by this Office for any crimes, except for criminal tax violations, related to her participation in [the FTX scandal]."
IIUC, by "further" they mean "in addition to the 7 counts she pled guilty to [and could serve jailtime for]."
The charges she faces before the plea deal carried a maximum sentence of 110 years and no mandatory minimum. According to several experts (*, she will likely walk away with no jail time or, at most, a few years in a minimum security jail. The prosecution against her was basically stayed - again, my conjecture - as we will find out in a few weeks time.
(* https://www.bloomberg.com/news/articles/2023-11-03/sbf-s-inn...
https://www.justice.gov/usao-sdny/pr/united-states-attorney-...
"CAROLINE ELLISON, 28, is charged with and has pled guilty to two counts of conspiracy to commit wire fraud, each of which carry a maximum sentence of 20 years in prison; two counts of wire fraud, each of which carry a maximum sentence of 20 years in prison; one count of conspiracy to commit commodities fraud, which carries a maximum sentence of five years in prison; one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison; and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison. ...
"The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge. "
As someone else said, this is factually false on the charges she pled to.
Mainly, though, I don’t know what you mean by “which she’s unlikely to be found guilty of”. When someone pleads guilty, if the judge accepts the plea, there is no other finding of fact. She already is guilty. That’s what pleading is.
She’s already been found guilty (by virtue of her plea). What hasn’t happened is her sentencing.
Caroline Ellison pleaded to two counts of wire fraud, two counts of conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering.
Looking at the Federal Sentencing Guidelines[1], even accepting for her being a cooperating witness, she's very likely going to prison too for a fair amount of time. Just for (probably much) less time than SBF.
[1] Run your own calculations: https://www.sentencing.us
https://www.bloomberg.com/news/articles/2023-11-03/sbf-s-inn...
"Ellison, Wang and Singh will likely get no or very little prison time for their testimony, several criminal defense lawyers who’ve followed the case said."
Do you realize that those 19 murders likely carried 19 consecutive life sentences as a maximum sentence?
However, all of the expert opinion I have seen on this suggests that there will be no jail time.
But presumably there will be at least some effort to secure a substantial downward departure from the guidelines sentence.
SBF even if he gets a huge sentence will just get eventually pardoned after 6-10 years. Again, soft slush money.
According to you? Because “trust me bro”? What are basing this on?
- they go visit the Saudi rulers. Yes, the most powerful political leader goes TO SAUDI ARABIA to kiss ass. Why?
- they begin planning/fundraising for a "presidential library"
- they plan their "offices", often with donations
- they have the power to pardon people with no restriction
- ye old speech circuit
- in a similar vein, the Trump inauguration exposed the various inauguration slush funds used by presidents over the years when they get elected.
In case you don't get it, all of this involves slush money and backchannels and the like. Granted the pardon power is more visible than most since Clinton pardoned a lot of white collar stuff: https://www.justice.gov/pardon/pardons-granted-president-wil... particularly Marc Rich.
And the old game of announced sentences vs the actual amounts served is often hilarious.
Between "good behavior", connections to get in lower security facilities, reduction on appeal, and of course there are tricks like only having to show up to actual prison months after sentencing (Elizabeth Holmes took 5 months before actually having to report to prison).
Yeah the feds don't do as lenient good behavior, but you can still get 54 days credit per year served.
There's other tricks. SBF might be able to help recover funds if he cooperates after conviction, and that can lead to prison being delayed further.
So sure it seems like SBF is getting his comeuppance, and he's way too famous for reductions, but the news cycle is remarkably fast, and the public will forget about him in a year or two.
Kenneth Lay allegedly died of a heart attack before going to prison. Now, I would like to assume that was above board, but based on a couple of my relatives dying, death is a bunch of forms and a cremation of ... some body.
Well, it was a very big fraud.
If the median prison sentence for nonviolent theft of a $30,000 car is 2 years, why shouldn't the prison sentence for stealing $3 billion be 200,000 years?
Good - she was SBF's girlfriend and was told what to do by him.
Bad - her dad, an MIT economist worked with Gary Gensler, head of the SEC. They probably have connections
I would agree with you that it's a good reason if there were evidence of the coercion. I don't think we can assume it outright.
what does any of that mean?
* She and a few other people were in relationships with SBF and/or each other at the time. A polycule is generally a connected graph of n > 2 people (the nodes) in romantic/sexual relationships (the edges).
* The kimchi arbitrage was a trade where you bought BTC for USD somewhere other than Korea, transferred them from the non-Korean exchange to a private wallet, then sold those BTC for Won in Korea, and then sold those Won for USD (and repeat the cycle). It worked because Korea had strict capital controls for its citizens that meant that the price of bitcoins on native exchanges was substantially higher than outside. It also carried tremendous risk because you had to wait for those bitcoins to settle in your private wallet at each cycle, effectively exposing you to risk associated with fluctuations in the bitcoin price.
Physical movement in and out of South Korea is part of the Kimchi arbitrage, so you have to "run off" to do it.
Is this a real thing, or just a finance joke I just don't understand?
I love a good arbitrage technique, but this one really just reads like an excuse to go to South Korea with your friends (or your polycule).
The risk that you end up getting banned from entering Korea for doing this trade too much was real, but I don't think anyone who tried this trade faced any of the possible consequences.
their POV is that this is net good for society. outcome we want = no crime
how to deter? 1/ big punishment for main actor 2/ get complicit actors to cooperate
and so by giving plea deals the gov shows that cooperation can save you
and she got a sweet deal, but she's not getting away scott-free, and will likely see real prison time and huge fines. yeah she may have another $2 million hidden away as Monero somewhere, but her career is busted -- no one is ever going to trust her after this -- and if the Feds get wind of cash they didn't know about that could end in more charges.
it certainly isn't a get out of jail free card, just a "dont spend 60 years in prison" card.
Don't forget -> book deal. She's still capable of making money off the outcome and transitioning into a career as more of an evangelist for what NOT to do.
The other involved principals pled guilty to multiple federal felonies, and are likely to spend at least some time in prison even if their sentencing gives them large reductions in what their sentence for those crimes otherwise would be for their cooperation.
At some point, every society has to decide where to draw the line at "this much punishment is enough punishment" when the crime is basically setting value on fire. If you don't, you end up with the whole society on trial ("Why aren't we prosecuting the people who gave them the money? Surely had they done their homework, they would have known...").
... and we end up drawing the line slightly on the side of "let the least-powerful guilty go" because there's heavy incentive to get them to turn on their bosses so our society can hold the most powerful (most equipped to hide their bad behavior and understand how to subvert the law) accountable at all. This is very much a problem at the intersection of justice and the realpolitik of enforcement.
(... technically, every German citizen was a Nazi. They didn't end World War II by nuking Germany until it glowed).
The fall guy? Come on.
Some low-level bank executive commits fraud and this place calls for the CEO's head. SBF was in charge an knew everything that was happening. IT sounds like he orchestrated most of it. There was zero element of rogue employees, or anything of the sort.
only two things wrong with this claim:
1. no CROs, CEOs or COOs were judicially punished in any way for the failure of their banks.
2. CROs and CEOs were clearly responsible for those failures. That's literally their whole job for which they were typically paid 7 to 9 figures annually.
This is a very weird argument you're making. They successfully prosecuted the main perpetrator of a massive and very complex fraud in spite of him being (pre collapse) the absolute golden child of the industry. That's a huge win.
Getting time for anyone else is far less important than getting guilty on all charges for the main perpetrator.
Not OP, but as a layperson like myself, what is the compelling proof that "complex fraud" actually happened? Last night I clicked 3 different articles--including Wikipedia's page on the trial--and it was a really long read. I should be able to read somewhere in a single paragraph, what was the main crime, and what was the best/crucial evidence for it. The Wiki page for instance began by listing a litany of alleged crimes--which for lay understanding is the wrong level of detail. I would like a clear, simple, compelling summary but it actually not that easy to find this information written concisely in a neutral article.
Alameda was also allowed to borrow far more money than other borrowers, because they were deeply in debt. Also bad.
Though this arrangement might initially evoke traditional banking practices with eg mortgages, the situation becomes even more problematic as Alameda secured their loans using tokens minted by FTX.
The easiest analogy here might be: A failing real estate mogul, who has an intimate personal relationship with a bank head, using stock shares of the bank as collateral for mortgages instead of the properties themselves—a clear conflict of interest, wrong way risk, and a shaky foundation for financial stability.
Edit: The bank in this case could play dumb and insist it had no idea that was fiscally irresponsible, which is basically what SBF argued, but at a certain level of incredulity you stop receiving the benefit of the doubt.
The issue that I have is the correct concept and the correct argument. The proof of fraud, I think, requires forensic evidence and proof beyond reasonable doubt. Not the optics and my personal level of credulity.
And I say this as a Marxist leftist, so it's not like I'm any supporter of cryptocurrencies, etc. I might even argue that under capitalism, people's notions of 'responsibility', 'stability', 'fraud' etc. are already so distorted that they don't have a coherent theory of what things are crimes and what things are just morally bad, socially bad, and so on.
Fraud has a specific meaning [1] but you could think about it as being a negligent misrepresentation of some fact for unjust financial enrichment. So if I say to you I'm a billionaire[2] that's just a lie not a fraud. But if I say to you "I'm a billionaire, invest with me and I'll make you a billionaire" and I take your money and just go spend it or whatever, that's a fraud because you were relying on a fact I negligently misrepresented and you were harmed. The complexity comes because there are lots of seperate laws under which fraud is illegal. So if you lie on a loan application that's a different type of crime to if you tell someone they are buying shares in a potato farm and the potato farm doesn't exist and you just spend their money on blow instead. They're both fraud but they are different kinds of fraud.
If I honestly get your cash for an investment, make that investment and lose all your money because it just doesn't work out, that's not a fraud.
Hope that's clear. The meaning of the word fraud doesn't change from a capitalist vs a Marxist perspective. It's just "fancy lieing for financial gain" either way.
[1] Here's a US-specific summary https://www.law.cornell.edu/wex/fraud
[2] I'm not. As far as I know at least.
Portraying Alameda as a typical borrower, while concurrently implementing a code change that singularly permitted them to maintain a negative account balance, is outright fraud.
Further, it seems like what you’re arguing is that more people should be prosecuted for banking crises, not that SBF shouldn’t be charged. Those two things aren’t mutually exclusive.
1)If you want to know the full facts of what he did and how the court case went you'd need to do more than read the wikipedia page.
https://www.courtlistener.com/docket/66631291/united-states-... is the full docket of original source materials if you want to find out for yourself.
It was a complex case so there are a lot of documents etc but all the actual facts of what happened in the case are there. IF you want to read who said what, what all the documents to and from the judge were etc, go nuts.
2)If you want a simplified version, it's basically what a sibling said. FTX was an exchange. That's supposed to look after people's assets that they place in custody so they can use those assets for investments. Alameda was a hedge fund. It's supposed to use investor's assets to make investments. Instead, FTX loaned customer assets to Alameda to invest. That in and of itself is no bueno right off the bat. It's a violation of the contract with customers when they deposit and is improper use of customer funds.
Secondly they kind of spent 8bn of the customer assets. On getting celeb endorsement, private jets, parties, conferences with big-wig speakers, real estate and other stuff. That's called stealing, and is also considered a no-no.
Third there were campaign finance violations. He took customer money and improperly used various front individuals and companies to make political donations. That's not legal.
Fourth he seems to have violated money-laundering laws either by part of the third thing or in some other way.
Fifth there was probably also wire fraud because everything is wire fraud and also because they actually had a Telegram Chat channel called "wire fraud" (they say irony is dead).
That's probably not all but it's enough.
One question for legal people—why is there such a long gap between conviction and sentencing? In this case, the sentence won't be set until March of next year.
He could have chartered a boat to Venezuela and taken a few hundred million with him.
Of course, all the people he defrauded might follow him.
Is there not a house next to Edward Snowden?
Why stay?
Extradition treaty mainly just lets some foreign country start a process in local courts to hand someone over.
You need to butter up a place with adversarial relations.
Or go somewhere with ironclad constitutional protections against extradition. And even then, e.g. France only has those for its own citizens and may still prosecute you locally for your crimes abroad.
Its a big world out there and a shockingly large portion is free of recognized government control. In such places you pretty much live by your own bootstraps rather than what some far away western country says, at least on the individual level.
What really really shocks me though is that SBF didn't just jump on a yacht out right after the failure as he easily could have done. If he had sailed to the right part of Latam or West Africa he'd have a decent chance at not getting caught.
The fact that he did this instead of executing a planned escape and going to hangout with Ruja Ignatova is the main reason for me to think he believed his own shit.
Leaked his ex-gf's private diaries in an attempt to intimidate her.
Decided to testify at his own trial.
I'm almost certain that he thought he would give a grand speech and all the jurors would instantly take his side, just like he had experienced with VCs, journalists, employees and other sycophants for the past decade.
Given how harsh the US is on financial crimes, I always thought the former opinion was smarter. Nick Leeson only got sentenced to 6 1/2 years in Singapore (and served 4). Or, alternatively, most stats show higher levels of corruption he could've finessed in his favor in the Bahamas.
As soon as he arrived on US soil it was over for him IMO.
At the end of the day he deserves everything he's getting
So yeah. I'm pretty sure he's getting the slammer while waiting for sentencing.
I don't know how that would play out, but he isn't exactly looking good, character-wise.
To me, probably. He exhibits much of the same traits as Elizabeth Holmes in terms of perspective on his own intelligence and entitlement.
She surrendered her passport, without mentioning she had or had access to another one, and was caught planning to leave for Mexico with a one way ticket and no accommodation booked, and then tried to claim it was "for a friend's destination wedding" (which shouldn't even have mattered - the surrender of the passport meant she was forbidden from leaving the country, regardless the reason).
How the hell people this dumb become CEOs.
He's been convicted, he's gonna stay in jail.
> There's no realistic grounds for appeal
They are required to stay out of custody while that appeal is pending, though.
It sounds like its plausible, but i'd like to know for a fact
First thing we all agreed we would not be coming back on Monday…
But, frankly, if I were on trial by a jury of my peers, I’d appreciate it if people took their time.
It also turned out that we were all mostly on the same page.
Criminal stuff i certainly would have not agreed.
The lunches were sandwiches from the vending machine. Two choice ham and without meat. They were good I can taste the salt on the ham as I write this.
The conversations within the jury are like tv. Immediately you have a few who think anyone on trial is guilty. You have a smaller group who want to find reasons they may not. At some point someone will accuse that group of being part of the criminal conspiracy. Friends and enemies are formed. Promises and deals were made but all disappears after the verdict (someone offered me a job and ghosted later).
Protections? I had a job offer to start that week that I lost because I couldn't start. No police protections.
The actual trial is very boring. Police reading notes. Long winded questions without any tv drama.
Worthwhile as an experience.
The high-profile cases like SBF's are a tiny fraction of jury trials in the US, most trials have no significant risk of jury tampering and the jury is not sequestered, meaning that if we had needed more time for deliberation, we would have just gone home for the evening and shown up at the courthouse the next day. We did have our phones collected at the start of the day and returned at the end, which seemed like a reasonable precaution against both "independent research" and distractions/interruptions, and would have also made jury tampering somewhat more difficult if anyone was so inclined.
In our case if you reached a verdict you were done serving so no need to drag it out.
Kind of scary that this is the rigor our justice system hinges on.
It was also a pretty one sided case.
That’s not the scary part. The scary and eye opening part is that an obviously frivolous lawsuit against can bankrupt you.
There is a YouTuber with h3h3 productions and he got hit with a lawsuit and it cost them USD 50k + USD 170k, at least. Maybe chump change if you’re a billionaire but I’d lose by default if you were to sue me.
The guidelines calculations, contrary to public belief, are pretty easy! You will have a pretty good success rate just carefully reading the charged statutes in the indictment and then following the instructions in the guidelines. But the PSR, prosecution, and defense filings all take a bunch of time, and involve "reporting" or "research" or whatever you'd want to call it.
That process ostensibly can't even start until everyone knows what the precise convictions were.
For what it's worth, I think there's a very good chance he just gets the statutory maximum penalties here, because the dollar loss and victim count numbers max out the 2B1.1 guidelines (which, for instance, cap out at $10MM in dollar losses). Attributing specific dollar losses and victim counts is ostensibly one of the things that makes sentencing take so long, but as long as it takes I think the outcome is a foregone conclusion.
† Later: they're definitely not public; there's a whole victims rights thing about getting victims partial access to PSRs so they can be heard in the sentencing process. I guess I can stop looking for them.
Follow up - is there any kind of correlation in the gap length, between sentencing and PSR ?
I could see a situation where the gap is longer than a sentence, and that would be pretty sad for the prosecuted...
But his sentence is going to be so long that there isn't going to be any injustice at play for him to be in confinement for a few months while they work the numbers out. He's not getting out in a year or two.
I doubt he'll get out before sentencing, he's looking at up to life in prison so in addition to having a demonstrated history of ignoring his release conditions he'll also be a huge flight risk.
But the number of victims and the hardship element probably means he's looking at life.
* 7 as the 2b1.1 baseline
* +30 for dollar loss, which caps out at $550MM, against CFTC's estimate of $8Bn
* +6 for 25+ victims, another cap
* +2 for financial misrepresentations, maybe, depending on how bankruptcy fits in
* +2 for either sophisticated means or deliberate use of foreign jurisdictions (the same clause, one of those predicates is definitely going to hit)
* +4 for jeopardizing (or, in this case, destroying) a financial institution --- at a minimum, +2 (same clause) for >$1MM gross receipts
* +4 for his function as the leader in the crime
* +2 for obstruction, maybe
* +1-2 for grouping/combined offense level, depending on how the conspiracy, wire fraud, and campaign finance stuff groups out.
So that's low-to-high 50s as an offense level. 43 is straight life. But there's probably a statutory maximum in the mix here that takes life off the table somehow.
Later: I miskeyed the 2B1.1b1 cap, as 10MM (the bottom of the page); it's 550MM (on the next page). Doesn't change the analysis much, which is why SBF is so fucked.
I share your expectation that it'll turn out there's a statutory maximum somewhere, but the math seems the check out.
If you do it in the order in the guidelines manual, the dollar loss is the first figure after the base offense for the offenses to which it applies, so (with a base of 7 for the wire fraud charge), you'd get to 37 with it alone. But if the tool does it in a different order, putting some of the other factors first, or you work a different charge first and its applying the grouping rules as you go, it would be very easy to hit 43 for SBF at the +30 for the dollar loss, and so get pegged to "life".
The actual aggregate statutory maximum for the offenses he's been convicted of (115 years) will limit the actual sentence though.
It is not often that I get to say this lately, but the jury restored some of my tired faith in the system in US.
I believe that's what you're supposed to do, as implied by "beyond a reasonable doubt" -- so good job!
I was on the jury of a federal fraud trial with 2 defendants with 15 charges, ~30 million in losses.
We were thorough and went through each count separately, including reviewing some of the evidence, and were done in maybe 8 hours spread across 2 days.
We ended up with a mixed verdict: one count not guilty for both, another not guilty for one. I fully believe they were aware and committed fraud for the not guilty counts, but the prosecutor wasn’t able to cross the “reasonable doubt” threshold in our minds for those specific instances.
Only thing we weren’t super careful about was the first requirement for Mail/Wire fraud, which is “Mail and wires” were used.
It was amusing that the prosecutors brought in a bank IT guy to explain that “the internet uses wires”, but not really something we questioned.
‘That is correct.’
I wonder if they did that to avoid having to explain to the jury that wire fraud does not actually require the use of wires...
And are modern fiber optic cables wires in any sense of the word? Does the relevant statute in USC18 actually define "wire" for the purpose of the crime?
Part of me thinks that wireless communications must be included, but one might make the case that even then, information/communication is transmitted over wire at some point.
"having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice"
https://www.law.cornell.edu/uscode/text/18/1343
UPDATE: Various court decisions have expanded the interpretation so that "wire fraud" also involves the use of the internet, phone calls, emails, social media messages, faxes, telegrams, fiber optic, cable or SMS messaging and data systems.
I am not a lawyer, though. I could be mistaken on this.
https://www.popehat.com/2013/02/05/crime-whale-sushi-sentenc...
A takeaway:
"1. Maximum sentences have very little relation to actual sentences in federal law. When the government quotes the maximum sentence, they are trying to scare you. When the press quotes it, they are uninformed or lazy. Exercise skepticism. Resist emotional appeals to "how is this sentence reasonable when murderers get less?"
This isn't the place to be sticking up for journalism. They really are both uninformed and lazy.
My cognitive capacity, however incredibly large it is, still is finite. Wasting it on crap like this means I'll almost certainly miss something else. It's difficult to believe that this isn't deliberate, but I manage to ignore that impulse... incompetence is still more likely than malice. Hence, "lazy and uninformed" instead of "deceptive and propagandizing".
The whale sushi article is excellent and is a good intuition for most white collar crimes. You run into the big exception in these ultra-high-dollar cases like Theranos and FTX, because of the 2B1.1(b)(1) dollar loss chart.
But it's not like when the scale gets big enough, the whale sushi hypothetical math starts becoming the real way we calculate sentences. It's just that the guidelines really do try to account for super villain levels of crime.
No, it doesn't “start to blend together”. The amount you get when you take all the base charges, assign then the maximum sentence, and have them run consecutively isn’t something that the upper end of the guidelines range coincidentally blends into despite not actually directly applying, its the actual legal limit, and for that reason is directly applied (by assigning the statutory maximum to each offense and having them run consecutively) in the guidelines as the limit case. (It also, while the guidelines are not mandatory and judges may depart above or below them, is the upper limit—and, where it exists, the statutory minimum the lower limit—for sentences that depart from the guidelines.)
> But it's not like when the scale gets big enough, the whale sushi hypothetical math starts becoming the real way we calculate sentences.
Yes, it is. If, after all the other pieces of the guidelines calculation are done and all the offenses that aren’t required to be sentenced separately at their own statutory amounts are grouped in the way that they would run concurrently were the guidelines sentence short enough, the guidelines specify that you look at the total punishment, if it fits in the legal maximum for the offense with the longest limit, you do that and run everything else concurrently, if not, you run enough consecutively, if possible, yo reach the total possible, until you run everything consecutively at its max legal sentence and stop. “Whale sushi” is exactly the mechanism applied by the guidelines in the limit case, not something that the upper end case under the guidelines happens to approximate coincidentally.
> It's just that the guidelines really do try to account for super villain levels of crime.
No, its that the guidelines are, well, guidelines for calculating a sentence which is constrained on the lower end by any statutory minimums and on the upper end by thr statutory maximums for the individual offenses (and also, by statutory rules on which offenses must be sentenced separately and not concurrently with which other offenses), so each of those binding rules is expressly part of the guidelines sentence calculations.
Her sentence has already been reduced to 9.5 years.
While its a lot, its substantially less than where the table for loss amount tops out at $550 million, whereas it seems certain that SBF is going to top out the chart.
I believe the statutory maximum for fraud is 20 years, and so I suspect that's the minimum that he's going to be in prison for.
The judge can order consecutive sentences for multiple charges, making the effective statutory maximum in such cases very long indeed. Sholam Weiss [1] was an extreme example of this, racking up 845 years for a $450M fraud in the 90s.
I don't think you're right, but in any case, even if he receives the statutory max, it's unlikely he'll do it and stay in jail for 115 years.
Yes. It literally does.
Not trying to say that this is something I'd build a moral or legal system around. Just that emotionally I can kind of see it.
So it's not the case that when one person is responsible, someone else has to be irresponsible to balance things out?
At this point, I wouldn't be surprised if they do. To deter potential future-SBFs. I mean, the whole cryptocurrency space is filled to the brim with scammers, many will never face anything at all. But when you've nailed the biggest of them all, might as well set an example.
EDIT: I do not believe he will serve 110, or 50, or 20 years. But hopefully they will dole out the maximum of a realistic sentencing.
A couple of year behind the bars would be a complete joke. From all I've seen, I have zero faith that SBF will be "rehabilitated" by a year or two in prison.
But really, anything to do with crypto or NFTs should be a red flag at this point.
As others mentioned, unexplainable business models or money coming out of nowhere are major red flags. A few others to look out for if you are applying for a job:
1. Few or no internal controls. A medium-size or larger company not having a CFO is particularly questionable.
2. People in high positions, including the CEO, lack qualifications or experience. Often the CEO will hire inexperienced or incompetent people for high-level positions because they a) won't figure out what is going on or b) can figure it out, but are too grateful for the position to say anything. Or maybe the CEO never finished college in a field where everyone has a PhD (think Elizabeth Holmes).
3. History of experienced / qualified people joining the company and leaving soon after
4. Seemingly unexplained success.
5. Extravagant spending and inappropriate workplace behavior.
6. Cult of loyalty to the CEO and/or a "circle" around this person, including close interpersonal relationships.
The pipeline into our collective understanding of tech is now:
scifi hype pitch -> VC flood of investment -> press releases across world -> governments worry -> disappointing IPO -> malpractice -> one or more execs arrested/sacked -> media elite across world convinced new invention will destroy the world
uber creates a taxi service, amazon an online mall, openai a ghost writer -- and we're all subject to an industry of VC hype men desperately trying to get those multiples above 20x by assaulting the popular consciousness with delusional BS
Really shows how he did it using the steps detailed above.
https://www.netflix.com/title/81466159?preventIntent=true
The Wolf of wall street film also shows the same pattern.
I just had a meeting for a Job. Flags 2 and 4 were there already. Unclear business model. I have a PhD. While this does not make me necessarily smart, I have an insight and understanding of many industries. If I don't understand you business in a few sentences, you are either a fraud or are much much smarter than me.
I give you a few more red flags, but remember, this are red flags, not proof of fraud.
1. Operating over many jurisdictions.
2. Opaque payments/salaries. Either to good to be true or commission based.
3. People who don't understand numbers and often are off by a magnitude. The stock is worth 5 bucks, could go up 200 times and then ist 10k per stock. Company is worth now X billion, could be 200 times more. 200 times? We are taking market capitalization of the biggest players here, is this even possible for this specific industry?
4. Mentioning big names. Studied at MIT etc. (but very likely did not) Or for low lever frauds, build trust by assigning with law enforcement. (My farther works for the police, is a judge etc.)
5. If you know an industry you know the stuff, you know the numbers and you are never caught off guard by a question.
If your gut says they might be criminals, they are probably criminals.
>> Worked in crypto and I got that vibe so left. Regret it. For every SBF there are hundreds who get away with it. Tons of talentless crypto millionaires still roaming free. Look at the Axie Infinite guys plundering a whole country. Token could collapse, but there’ll be no justice and they’re sitting on at least 8 figures individually
my understanding of this comment:
They worked in crypto, got the feeling they may have been working for crooks, so left and regret being part of it at all. They are upset that many scammers who made millions are still walking around and will face no justice.
vs what I think is a total misreading:
> Wait. Do you regret leaving? Because the fraud works out for some?
There are loads of people who successfully made millions and won't face justice, and they regret leaving before making similar money.
It worked great until regulators disallowed the Sprint purchase because it would have put too much of the long-distance market in one company. (And as we all know, we stress a lot about choosing our long-distance carrier these days.)
Then all of the somewhat shady side-deals became concerning, as WCOM was no longer growing like it was. Then people started looking more closely at the financials. Then it all went kerflooey.
It was ahead of its time because it's not that different from tech companies today, only replace business growth with user growth. Profits? Ha ha ha, don't be silly.
> That’s when SBF told Sequoia about the so-called super-app: “I want FTX to be a place where you can do anything you want with your next dollar. You can buy bitcoin. You can send money in whatever currency to any friend anywhere in the world. You can buy a banana. You can do anything you want with your money from inside FTX.”
> Suddenly, the chat window on Sequoia’s side of the Zoom lights up with partners freaking out.
> “I LOVE THIS FOUNDER,” typed one partner.
> “I am a 10 out of 10,” pinged another.
> “YES!!!” exclaimed a third
Like, he’s rambling about how you should buy bananas with Bitcoin. How was this compelling to people who control serious money?
It always struck me as the opposite. If someone running a crypto futures exchange said they wanted people to buy bananas and groceries on their platform that’s be a signal to pass, right?
the line between "crazy, brilliant founders who will build world changing companies" and "crazy, lunatic founders who will lie and cheat and be awful" is very hard to distinguish, especially at the series seed/series A level.
It can lead to false positives and false negatives all the time.
No VC in their right mind should ever pour billions into a finance company that doesn't have a CFO or risk management team, doesn't have properly audited financial statements, doesn't have board oversight, etc. Especially so in a risky industry like crypto where scams and fraud are well known to be rampant.
This is the main criticism I have of the people who invested in FTX. Even if you thought SBF was a world-changing entrepreneur 2 years ago, the structure of his company should have disqualified it from investment.
Venmo is valuated at something like 40 billion dollars, and a huge amount of its use is people making $10 payments to each other.
I'd hate to live in a world where I conducted all my business on FTX, but you can see why it might be appealing to investors.
I mean, I'm not imagining that they have groceries listings on the app, but that the app allows you to transfer money directly to someone from your crypto wallet. Like a venmo payment but with crypto.
The thing is that's not a novel concept, just about every crypto wallet app can already do this. And the achilles heel of all of these apps is the gas fees that are out of their control. The only way to conceptually get around gas fees is to keep everyones money centralized and sidestep the trading of crypto all together, but in the process you defeat the entire purpose of crypto.
They will spend $200m+ on a clown like this but ignore countless people with real innovations.
SBF was just a thief and a gambler, and an incompetent one, at that. I still think Sequoia does have some responsibility here, but I suppose my point is only that hindsight is always 20/20.
No, they weren't successful. When you leverage up and make (paper) money and later those same investments are wiped out and destroy the comany, you don't get to say you were "successful".
Yes, it made money. Yes, he claimed it was legit, but it wasn't--it was money laundering illegal gains. It just sounds so much better when you call it "arbitrage".
This was all covered in the case.
In 2020, FTX was known to offer collateral on huge loans vis FTT, their stabelcoin. Parties backed off bc of this.
The interplay b/t Alameda and FTX was known and parties wouldn’t trade or do broker agreements bc of it.
within crypto, the growth of FTX, although concerning, was frequently discussed as likely inorganic.
The VC and SEC buy-in to FTX was uniquely inept.
-Dresses like a slob
-Went to MIT
-Is from the Valley
-Has ties to Stanford
-Upper class background
Their VC brains didn’t stand a chance of sniffing this out.
The anti-Adam Neumann. Brilliant strategy.
They had the largest crypto exchange right? That's a competitive market. Seems like something was going right.
As a humble poor, if I were running the show over at Sequoia I would have these people out on their asses, but again, I also don't have buckets of money clouding my judgement.
Regardless, what I'm describing is exactly what an investment bank does for a legit public company. They purchase shares from the issuing company to guarantee a certain amount of capital for the company, and then sell it on the secondary market, which in most cases would be to other invstment groups or directly on the NYSE. The difference is that those companies issue S-1s disclosing their performance and numbers, allowing secondary market investors to make an informed buying decision.
https://corporatefinanceinstitute.com/resources/career-map/s...
Everyone and their dog was looking for an actually credible, mass-market compatible usage scenario for Bitcoin beyond buying drugs on Silk Road.
Access to money, and intelligence, are not positively correlated. Jury is out on whether there is no correlation, or if there is negative correlation. Given the braindead antics of the wealthy over the past 10 years, I'm leaning towards the latter.
How about Musk who bought a successful if mid-tier social media site for 44 billion dollars and has cratered it to being worth barely 4?
How about Zuck who renamed his entire damn company in a bid to pivot to the metaverse just in time for that entire house of cards to come crashing down?
I loved that piece, and the fact that it was removed soon after.
Not if you're so silly as to think you can replace the currency people use, plus control completely its medium of exchange, plus be able to trade against those same exchange's participants. It boils down to people trying to rebrand casinos as markets.
It's pretty wild how unhinged they became about pretty much rambling...
I'm no VC, but I feel like if I am and you're telling me that _all_ consumer transactions of any kind are going to flow through a portal _you_ own, it doesn't get much bigger than that. The odds of success don't have to be that high, and in principle you just factor the possibility that the founder's full of crap into those odds; you don't have the time to understand every possible market and every person pitching you in the depth necessary to make that determination, right?
>The odds of success don’t have to be that high
The odds of success are as good as nonexistent and I also don’t have to be a VC to understand that.
Holders of serious money often put them into decidedly unserious things. Somebody once put together $44bn cash financing for Twitter dot com.
I've gotten in a number arguments with people who don't understand white collar crime, think these guys are "smart", and are so surprised by how basic their scheme is, and how they thought they'd get away with it.
These people aren't smart, any more than your local gang banger, or small time fraudster... the stories are remarkably similar.
There's lots of white collar criminals that have cloaked their schemes as part of "altruism". This isn't even new.
This worked great as a marketing gimmick for sure, as people love the mythos of a revolutionary company run by a tech prodigy.
But it also works when everything falls apart because SBF's delusion driven ego sucked up every morsel of attention and responsibility.
I also wouldn't be surprised if, through various means, many of his investors ultimately walked away with far more money than they started. And nobody bothers asking questions about that because SBF does such a great job of drawing all the attention.
"Dad, why is the American government the best government?
"Because of our endless appeals system"
Thank You for Smoking
Look, ignoring obvious problems in the syntax..."
Beyond underrated (the book / movie)
Their arguments might vary and ultimately might not be very good, but you miss every shot you don't take.
If not, he might be fucked. Appeals aren't just "the lower court convicted me and I want to try again", they are "the lower court got it wrong, my lawyer brought the point up, but then they ignored it".
What will usually happen is that the defense team will find dozens of trial errors, but none of them will get over the bar of being serious enough that they would have swayed the jury, since the evidence presented was too conclusive. So, the appellate court will note that the trial judge could have done a better job, but then leave the conviction intact.
Most criminal convictions in the USA are only overturned on constitutional violations relating to searches and seizures, probably none of which apply here.
That's basically what I meant by it being "hard". Maybe "rare" would be a better term. The main thrust of the point is that the federal judiciary has been running criminal trials for a long time, and has worked out most of the kinks at this point. Most district courts are able to run a criminal trial without creating an error that creates an opportunity to overturn the conviction on appeal.
Have seen it a lot, and just wondering the attraction given it's a tech themed news aggregator.
So it was three co-conspirators testifying and a lot of hard evidence vs SBF saying that he remembered some conversations differently, and being incredibly evasive on cross-examination. They had nothing.
appeals aside, it's not over... We've had first trial, yes, but what about second trial?
Four charges had been separated out into a second trial for March 11 of next year. Same judge, different jury? May have been due to logistical reasons or discussions with the Bahamanian government around extradition. It sounds like the government has the option of dropping these over the next months as well.
Sentencing for this one (or both but that seems extremely quick) was just scheduled for March 28 2024.
Edit: another thing I'm wondering is about jurisdiction, since most of this occurred offshore and didn't involve US customers.
There have been tons of articles, podcasts, videos, and tweets about the trial. Evidence was mostly chat logs of SBF ordering crimes and testimony from Caroline, Gary, and Nishad that he ordered them to do crimes.
If you want a really detailed overview of his testimony and cross-examination: https://www.youtube.com/@molly0xfff/streams
> do they know where the money went
Not all of it (at least, not for the trial). They showed significant components of it as part of the trial, but they don't need to show a super detailed breakdown of every single dollar as part of the trial, so I don't think we got that.
> If not, how did they prove intent (I assume they proved intent)?
Circumstantial evidence and witness testimony mostly. Including a cross-examination of Sam that thoroughly undermined his credibility.
https://www.youtube.com/@overpricedjpegs
Extremely informative and fun to watch (if you can get past the "sponsor breaks" for NFT platforms and the like).
As a defendant you have a right to not testify at all. You can decide not to take the stand. No one can request you take the stand, and the prosecution absolutely cannot make arguments about your decision not to take the stand in front of the jury.
But if you do take the stand, then the prosecution gets to ask you questions that you must answer (unless there’s a sustained objection about the specific question).
This is why so often defendants do not testify. Testifying on direct (when the defendant’s lawyer is the one asking questions) will almost always help the defendant. But the risks created by exposing oneself to cross examination are massive, so most choose not to take the stand.
1. To pay for Alameda's (Sam Bankman Fried's hedge fund) and FTX's loses
2. Invest in venture capital and make acquisitions
3. Political donations
4. Charitable donations
5. Luxury real-estate, boats, etc.
6. "loans" (i.e. transfer of stolen funds) to FTX's top executives
RE: Intent - Intent was easy to prove. All of Sam Bankman-Fried's fellow executives testified against him. In addition, Sam Bankman-Fried gave several interviews after FTX's collapse where he basically admitted he lied, fucked up, etc. Also, there was a lot of documents proving Sam Bankman-Fried lied. A good example is him saying FTX was fine on Twitter (X) and then it collapsed a few days later.
Here are some good FTX resources:
https://newsletter.mollywhite.net/s/the-ftx-files - Molley White did a good job covering the trial.
https://www.justice.gov/usao-sdny/pr/united-states-attorney-... - This site contains the government's indictment against Sam Bankman-Fried.
https://restructuring.ra.kroll.com/FTX/Home-Index - A lot of the FTX bankruptcy documents are on this website.
(Seriously, if you're going to claim that Molly White of all people did a bad job covering cryptocurrency you're going to need to bring receipts.)
Main exhibit would be her editorializing (not reporting) of the industry with her site, https://web3isgoinggreat.com/. Here she posts only negative articles or opinions cherry picked for highlight issues with crypto. Every "hack", every rug-pull, every scam token. In my opinion its a HUGE waste of time and not useful or interesting.
The website she should have built for Web3isGoingGreat.com would be VERY simple, just a like to the home pages for Bitcoin White Paper, then the Monero and Bitcoin Cash home pages. Thats all anyone needs to know about crypto, the rest is a scam.
Etherium is a scam?
Doesn't that mean that you actually agree with her stance and reporting?
Ok, and this is what she writes about.
> And still, 10 years in, a near perfect tract record, people are still unsure about Bitcoin. What's the issue exactly, people are just scared?
A near perfect track record? How?
I think one could have guessed that from your first comment ;-)
This is complicated, but often it's possible to try someone in a single country, especially if it's their home country. In CSAM cases this often happens, the facts might happen in Asia, but someone is tried in their home country. I know the law in my country has provisions specifically for this and murder cases among others.
Anyone know the latest on this? Is FTX going to sell that stake off to pay back the debts?
[1] https://www.businessinsider.com/sam-bankman-frieds-anthropic...
What could possibly go wrong? :D
Say the Marvels is coming out, Brie Larson knows everyone hates her and she's a bad actor so it will probably flop. Brie takes out a $10 million short on her own movie.
Now she has an incentive to be horrible so she acts EXTRA bad and treats people even worse than usual to be sure it flops.
but it’s a moot point because centralized exchanges like coinbase offer a valuable service of solving a lot of the issues with crypto ux
So now the coin is defacto owned by FTX, not the customer.
Similar to what does not happen when you buy ATT stock in your Schwab account.
Generally only worth it if you intend to hold your stock for some time (which you should)
Others will let you send a cheque and buy more. Informal communities exist to buy that first share from another individual so you can continue.
Sometimes all at no charge. Was handier back when brokerage commissions were a thing (and a lot higher).
Did this with GE a while ago (worked out for me!)
When you put things (e.g., stock) in a “custodial account” with a company like Charles Schwab or similar, if they enter BK then your property is separate from the bankruptcy estate and must be returned to you, in theory.
FTX seems to have combined all the best features of all systems: because they had custody of the tokens, they were able to actually lose them; when they entered bankruptcy, the customer assets could not go to the secured creditors (to the extent that they were custodial, not debt) and they couldn’t go to the customer either (because “not your keys, not your crypto”).
Cherry on top: no FDIC protection. The only winner is the criminal, who is free (for a while) to use customer funds to pay Tom Brady to be his friend.
“Free from the banks,” indeed.
It's one thing for Google etc to invest billions in cash and cloud services[1] into Anthropic with the understanding that money will be used for engineering and growth.
It's quite different for any buyer to come in and spend $4B on the secondary market for nothing but shares, with none of that money going to Anthropic.
There is a large appetite for exposure to the big AI companies, so maybe the demand is there. But it's not as simple as selling a large stock holding on the public market.
[1] https://www.axios.com/2023/10/30/google-invests-2-billion-an...
There are tons of big private equity funds and several trillion-dollar fund managers for which buying a 10% stake of a privately held 30 billion dollar startup would just be a question of some paperwork.
This sounds like a loophole, and now that I think if it it probably is - VCs and stuff should not have been allowed to ask for money from pension funds without imposing at least some rules normally applied to public companies.
Is it actually possible that all creditors will get their money back? Pretty crazy if so.
Then again, GenAI perhaps undermines the notion of NFTs and "digital art/assets as valuable fungible commodities." It was really wierd seeing Stable Diffusion take off as NFTs were collapsing... so maybe there is no universe where FTX fakes it until they make it.
And that's basically NFT's niche, as I understand it. Why bother commoditizing the digital space when (according to GenAI acolytes) digital scarcity is going to disappear anyway?
I dunno about NFTs representing real world assets either. It feels like the order is fundamentally lost once that jump to the real world made.
Digital scarcity is an artificial creation of copyright law, bought by people who had a vested interest in porting analog rules over to the new world after the infinitely error-free replicability of digital goods threatened their profit model. If generative AI puts them back in the same quandary, they will simply buy more laws and continue protecting their wealth.
The only important difference between physical copyright and digital copyright is the fact that you aren't allowed, in most jurisdictions, to sell on your legally obtained digital copy of something the same way you are for a physical copy. And even this is understandable.
The big problem with copyright is not the existence of it. It's the absurd terms it has gotten to. If copyright maxxed out at, say, 10 years, or even 20, we would live in a much better place than either today or even than a world with no copyright at all.
And obviously for the people impacted, it’s quite a loss to get all your money over a year after you tried to withdraw it, even if you do get it all.
But 100%, it's not just about getting repaid. Yes that helps, but not having your money last year might have mattered to some ftx customers
On the other hand, the current investors probably won’t want to make an exception for FTX if they know it’s going to cause them to write down their stakes.
You can't. Trades in even the most liquid private companies can still take weeks to close, if not longer. Add on the transfer restrictions that Anthropic almost certainly has, and you're going to be holding those shares for a long time.
But they’re usually a bad deal for the unfortunate creditor in a bankruptcy unless you absolutely positively need liquid cash immediately. Or have some non-public info that suggests the claims buyer is way overvaluing things.
General advice is to let your claim ride.
FTX’s bankruptcy filings are full of entries about transfers of creditor claims by some random hedge funds.
The payout will probably come in the next 10 years or so.
The problem with letting a cryptocurrency bankruptcy ride is that there isn’t much case law, so before you get paid loads of legal questions have to be settled which can take decades.
If you have an FTX claim then sell it, take the cash and move on.
Of course there will always be situations where someone could have invested reduced immediate proceeds more favourably, but it’s easy to say that in hindsight.
[1] - https://www.vox.com/future-perfect/23794855/anthropic-ai-ope...
It would be kind of ironic if the investments went up so much they could cover everything.
1. The donations to candidates are usually pretty small (think $2,900/candidate). The candidates can return the money but getting all of the money back will not do much for the creditors.
2. Some PACs got a LOT of money (think millions of dollars). The problem is they probably already spent it. You can probably sue them to try to get back the money but the PACs will probably just declare bankruptcy.
Here is a link to the donations: https://www.opensecrets.org/donor-lookup/results?name=&cycle...
Still small compared to all the stolen money
What should he have done instead?
When assets held on behalf of customers were comingled with company assets?
Here is what he should have done:
1. Sam Bankman-Fried SHOULD NOT HAVE STOLEN CUSTOMER MONEY.
2. Sam Bankman-Fried should have been honest.
3. FTX should have kept excellent records. FTX was notorious for its bad record keeping. Also, its poor record keeping meant it was not sure how much money it had and it was not sure which money it owned and which money its customers owned.
The fraud began when he gave false information to investors and customers.
There's not necessarily an "exact moment" that they can pinpoint, nor is that their job to do so.
FTX was promising customers it would hold onto their funds and keep them safe, much like a bank. Then they did not. That's the short of it, tat is what they uncovered. The date it "began" was not in scope of the case, just the end result, and the end result was that there was fraud.
> What should he have done instead?
Again, the short of it is: He should have delivered what he promised to customers, or not make those promises to begin with.
This fraud became worse the more negative the balance became since it became more and more misleading to users to continue to present themselves as a financially healthy business.
What they should have done instead is to not allow alameda to have an account with special rules and negative balances, and to actually operate their business as they claimed. They likely would have grown less quickly or even gone out of business, but sometimes the way you avoid fraud is indeed by going bankrupt instead of lying.
They also could have not lied to users, both about the status of alameda's account, and about the status of FTX's liquidity. Each time they made a statement about their exchange that excluded that materially relevant information was also fraud.
I do say all of this with full awareness that a large fraction of YC startups also "fake it until they make it", i.e. lie about what their product can do, lie about their financials, etc. Most YC startups are also committing fraud on a much smaller scale, and just manage to keep the scale small enough that no one goes to prison.
Most of the fraud you are talking about also wouldn’t have the explicit benefit directly to the founders the way it did with FTX. SBF took money that wasn’t his and spent it on private planes and luxury apartments and hundred million dollar investments _in his name_.
The average startup founder who is trying to close a sale by exaggerating their business a little bit is not going to have that kind of clear gain, because most founders do not use their companies as piggy banks.
The "Frank" startup that sold to JPMC because they lied about active users [1] directly contradicts your conclusion. It happens, probably more than we realize, and founders have an incentive to do it so they can reach a liquidity event to cash out.
[1] https://www.reuters.com/legal/former-executives-college-aid-...
When he used customer funds deposited into FTX to gamble through Alameda.
Since customer deposits into 'FTX' went straight to Alameda's bank account, it began pretty much the moment Alameda executed a trade. Everything after that was just more fraud to cover up the consequences of the original fraud.
> What should he have done instead?
Not treat customer deposits like a personal piggy-bank.
Very early on. Probably from the very start.
When Alameda, before FTX existed, gave investors leaflets saying Alameda had guaranteed 20% returns and it could sustain 20% profits on as many billions as they would get. This was a lie and criminally defrauding investors already.
SBF never did the Kimchi trade (i.e. arbitraging the US/Asia Bitcoin price differences) at scale (it's not even clear if he even managed to do it at all: he claims he did, but he's a pathological liar who kept lying in court).
So Alameda was already a scam. Then FTX was a bigger scam, to keep the Alameda scam going.
But the Alameda scam came first.
> What should he have done instead?
He should have kept playing LoL only.
https://www.reddit.com/r/Bitcoin/comments/p1oqqu/the_ceo_of_...
But any exchange in such close company with a hedge fund should always be suspected of front-running. There's an inherent conflict of interest between those two entity types. And I would be surprised if Alameda wasn't front-running FTX customers, given both firm's obvious ethical shortcomings.
You can of course front-run manually, depending on the degree of automation in the systems one is front-running, but front-runners will generally want to automate. And to scale the scheme for a realtime system of FTX's volume, Alameda would certainly want to automate it.
I wasn't following the case closely enough, but did the prosecution have access to Alameda source code, or was it only FTX? As long as Alameda had access to FTX order records, any front-running code would likely have resided in Alameda repositories.
This blog post [0] contains screenshots of git commits that were used as evidence in the trial. It only shows commits to FTX's source code, so I don't know if the prosecution also had access to Alameda's source code.
Given how obviously incriminating those snippets are, I don't think SBF really tried to hide his crimes. I'm not sure then why they would architecture FTX such there are no signs of front-running in their code.
Personally, my guess is that either A) the prosecution found evidence of front-running but thought that the case was air-tight enough already and they didn't want to confuse the jurors or B) Alameda didn't actually do any front-running.
[0]: https://newsletter.mollywhite.net/p/the-fraud-was-in-the-cod...
Indeed -- I knew several professional traders who used FTX. At the time, their consensus was:
1) "Probably Alameda has an unfair latency advantage, because they are the designated market-maker, and owned+operated by the same people who run the exchange." This could be called 'front-running' depending on how you define the term.
2) "However, SBF probably won't steal all our money because he is well-known, extraditable by USA, and would go to prison."
Needless to say, assumption 2) was incorrect.
SBF was a sociopath who would (acdg to sworn testimony of his GF) actually go ahead and toss the coin if the outcome was one side results in the world getting twice as good and the other side causes the world to be destroyed, and he DGAF that he was also making the bet for everyone on the planet.
They didn't count on the fact that this mentality would also mean that in real life, he would also do all kinds of risky crimes, and even go to trial instead of taking a plea deal, because there's a non-zero!! chance he could get away with it.
Bad bets all around
It could be true he's probably a sociopath, but having an edgy philosophical talk with your girlfriend is just that. It could say something about his character but it's nothing more than a fantasy.
Much more damning is stealing all those billions to become rich and famous.
I saw an article that implied that SBF confirmed on the stand his willingness to do the coin-toss, but I couldn't find it to confirm.
Perhaps the biggest evidence is that he went to trial instead of taking a plea deal. At the very least, he put his parents and family through an awful and unnecessary ordeal, just because he thought there was a chance he could convince a jury. But, in reality, it was not even close.
The "pretty sure" caveat is that I cannot offhand recite chapter and verse of all the citations.
The guy realized SBF was doing weird shit that was probably, if not straight up illegal, at least highly unethical. And front-running was the thing that made the most sense to him at the time.
No, what he was charged with was using customer funds.
I'm sure they did all kinds of shady things, including front-running customers.
I don't really think it shows clear evidence of him front-running FTX users. He doesn't even seem to be trading on FTX.
>Clearly OP has no fucking clue what he’s talking about because the videos in question don’t prove he’s front running.
>The Youtube video you linked to (I watched some from the point you linked), appears to be about trading an arb opportunity that existed because of a large sell wall on Binance. Where does it show he's using 'private FTX analytics' to 'front run his customers'?
It’s always a good blind bet that a singular new company and/or founder will fail their next venture, not just startups in the crypto space, but across every industry. If you know a little bit (insider info) about the space and founders you can probably make better bets, though .
There is no such thing as skepticism or critical analysis on these subreddits. Obviously these commenters are already holders and have incentive to convince more people to buy. Like you said, I'm sure there are plenty of bots active in pushing their narrative with no consequences or accountability.
Whether crypto is useful or not, the market manipulation and ponzi-scheme recruiting tactics are too sleazy for me to invest seriously.
Some of the replies to that... my god.
1) There's not a lot of weight to put on such criticism because for any success there are also critics. Critics are wrong until and unless they're right. As others have noted, in this case, he wasn't convicted for the thing these critics were claiming he was doing.
2) ... But, it's Bitcoin. Any critic claiming anything Bitcoin related is probably tied to a scam is statistically likely to be correct. ;)
Is Bankman-Fried's Guilty Verdict a Crypto's "Madoff" Moment?
Now there will be another hearing in March during which the judge will consider all of the evidence (even that which wasn't allowed in the original trial) to determine what his punishment should be.
The judge will have to abide by the federal sentencing guidelines which specify the punishments and severity they can apply but otherwise it's a matter of their discretion.
Way too many people here have read Popehat's (very important!) piece about how reporting of aggregate statutory maximum penalties is usually extremely misleading because in the vast majority of cases the guidelines ranges (1) will be applied, and (2) will be much shorter than the aggregate statutory maximum and are hypercorrecting into "SBF's actual sentence will be far below the aggregate statutory maximum because sentencing guidelines", without any idea of how the guidelines would apply to the facts at issue in the case.
There’s no discounts here.
What seems more likely to me is that life will end up excluded by a statutory maximum, and the judge will exceed the guideline dollar figure based on the degree to which SBF’s crimes exceed the guideline scale.
The judge will probably adhere to the sentencing guidelines (and will almost certainly use them as a starting point if not), but the guidelines are, like the Pirate Code, "more what you'd call guidelines than actual rules". The Supreme Court has ruled that the judges are constitutionally empowered to depart in either direction from the guidelines sentences within the statutory minimum and maximum for the offenses on which the offender is convicted.
Not my joke, I heard it on TrueAnon. But I like it.
What is the reason that is 4 month away? Clogged up justice system?
Jeff Skilling (Enron) was convicted on more counts and ended up serving 14 of a 24-year sentence. Elizabeth Holmes of Theranos got 11 years and 3 months.
Strangely enough, emotional effects of the revelation of the crime on the perpetrator’s family are not a factor in the federal sentencing guidelines.
In the case of SBF, it was indeed fraud: he was lying to his clients about what he did with their money. But there was another level to this, because he was also, I think, lying to himself and thinking he would make them whole in the end.
Therefore the intent is different. Culpability is not just about scale or harm to victims, it's always about intent.
Madoff also had a legitimate business, the Ponzi was on the side; he was very generous to his employees, donated a lot to charities, gave/lent lots of money to his children; he liked to commute on private planes (at a time when this was quite uncommon); he was at the forefront of technology innovation and the software his legitimate firm developed, helped build NASDAQ; he was a prominent member of his community, testified to Congress, was a proponent of regulation", and an important political donor.
But in the end, he pleaded guilty and confessed, contrary to SBF.
So I don't think anymore that Madoff was "way worse" than SBF; in fact I think it's the opposite.
It's what possible given the facts in this case under the guidelines, too.
> Jeff Skilling (Enron) was convicted on more counts and ended up serving 14 of a 24-year sentence.
The number of charges isn't the driving factor in calculating total punishment under the sentencing guidelines.
The Wire Fraud charge alone, looks like it gets a Offense Level of:
7 (base) + 30 (amount of loss over $550 million) + (breadth of victim impact between 2 [more than 10 victims, irrespective of degree of hardship] and 6 [caused substantial financial hardship to at least 25 victims]) + (2 for a substantial amount of the fraudulent scheme conducted outside of the US) for a total of 41 to 45.
The maximum level in the guidelines, calling for a life sentence (but limited by the aggregate total maximum sentence of the charged offenses if none support a life sentence), regardless of criminal history category, is 43.
ESP clinton
The MIT campus has a major public road running through the middle of it, one of the busiest surface streets in the area. You don't have to stand there very long to see a crowd of students almost get hit by a car because they didn't look before they crossed the street.
Point is, the old cliche is true, there really is such a thing as a person with a lot of book-learning but less common sense than a sea slug. I think we saw one such get convicted today.
It's not like because he made one really bad decision, none of this other bad decisions exist anymore.
Edit: well color me an idiot, I just checked and a 2019 usnews report had boston as ranked 3rd on worst drivers, based on whatever set of variable they came up with, so touche.
One other thing to note is that two of the _other_ top 10 are also in Mass, Worcester and Springfield. That's the only triplet on the list in the same metro area.
Though I guess, for the point I was making, it doesn't matter if Boston driving is the actual worst in the country or not, as long as it's very bad, which I promise you it is.
After all, it's not difficult to find an effective book teaching one to safely cross a road.
But how many MIT students actually get hit by cars? the number would be unusually high if the number of close calls were unusually high, but without looking up any statistics I can assure you it's something nobody ever thinks twice about.
Also Mass Ave which tons of people cross is not the most highly trafficked street by MIT, that would be Memorial Drive, but hardly anybody even has a need to cross Memorial Drive so that part is also hinky.
The end result looks like a lot of people have death wishes, but the pedestrian injury rate isn't actually unusually high.
Contrast to NYC where I do follow that exact process you're describing - act oblivious, make yourself look like you really will let them hit you, that way they won't. Although in NYC you gotta be real careful about that strategy...
Back then, painted crosswalks would have been a waste of paint.
There are also plenty of booksmart nerds with high emotional and practical intelligence. (I like to think I'm one, sure didn't used to be.) On the whole they are fun people to be around.
Raw intelligence is not enough in that context. Ideally you want to have apprenticed for at least a few years at a real exchange or custodial service. Somewhere you learn all the engineering details about how to architect it with proper financial controls, safeguards, and correctness guarantees so that this kind of failure cannot happen, either via human skullduggery, mistakes, or system bugs or security vulnerabilities.
Sam never had any of that. He probably got caught up in the moment, implicitly assumed he was smart enough to compensate and not need it, that money is fungible and free-flowing and he can move it around and always make more, etc. And his investors were all finance guys overly impressed with his trading ability and ignorant of the above. This is the unfortunate but unsurprising result.
Lack of internal controls isn't the reason for why the CEO and owner of FTX is funneling billions of its customer dollars into a company he owns - Alameda.
It's just straight up fraud.
You should probably let some other adult, (and the FBI) know if the owner asks you to do that, but you can't physically stop him. It's his company. He has complete power over it. It's not a democracy, there's no checks and balances on the power of an owner-CEO.
That people just accept that founder CEOs are allowed to do everything with their companies, and their companies money, is troubling. Because, as soon as said company is a seperate legal entity, it is the companies assets and not the founders anymore.
Maybe even CompSci graduates shoupd get some basics of business, legal and ethics during their studies.
That's a bit like:
"The bank robbers' mistake was a lack of internal control and security advisors who could have safeguarded them from robbing banks"
It's important for the business that the insurance fund is safe. If you look closely you will find that it is unsafe. But if people believe it is safe you won't need the insurance fund, so do whatever you need to to inspire confidence in the insurance fund.
(All things SBF may have told himself.)
I feel like justice is being done here, but there's a sense in which SBF and his cohort are the victims here. A world of zero interest rate incentives/people, a trendy money machine in crypto, a general sense that old people/regulations are impoverishing us all with their nervous sclerosis, all created an environment where--in hindsight--this was inevitable. If not FTX then someone else.
I think people are 100% right to call out the press/publications/investors/regulators who flat out encouraged this charade to continue well beyond the point where it was an obvious scam, and I think we really need to examine the VC culture of "find (or create) a young megalomaniac, give them tons of money, ... profit". How do we think these things will turn out? Will we spend billions of dollars building Uber, which at this point is an app that shows you ads and incidentally hails a cab? Will we spend billions of dollars building trash companies that scam people? Will we spend billions of dollars building Airbnb, which was pretty ruinous for cities and at this point not even a good business? Will we spend billions of dollars building e-scooter companies that exist essentially to create tons of e-waste that litters our sidewalks and landfills?
It's nuts. Please just fund day care.
It's undeniable he committed fraud, repeatedly lied to his clients and tried to make them give him money by telling them tales that weren't true.
But it also seems likely he thought he was clever/lucky enough that it would all work out in the end.
That makes the intent different, and culpability is always about intent.
In fact SBF reminds me more of Billy McFarland (of Fyre Festival fame) than of Madoff.
What on earth is the difference between this and Madoff?
>But it also seems likely he thought he was clever/lucky enough that it would all work out in the end.
What on earth is the difference between this and Madoff?
>That makes the intent different
Why do you assume bad intent in one case and none in the other? SBF stole customer money and used it for political donations during one of the most heated, divisive, controversial elections in recent American history. He's the sitting President's largest donator, and he's going to prison for fraud. The potential consequences here are massive.
Those investments were fraudulent because they were made without the consent of the people providing the money, but they were investments nonetheless: SBF was buying assets, not just pissing money away in jets and catering (although he also did that).
In Madoff's case there were no assets at all. It was not possible for Madoff to convince himself he was doing something that may become viable, given enough time. It was possible for SBF.
I think that's a pretty big difference.
(Also, campaign finance violations are not part of the trial that just ended, at all.)
> You cannot apply ordinary arithmetic to numbers in a cell labeled “HIDDEN POORLY INTERNALLY LABELED ACCOUNT.” The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison.
That's a pretty big caveat, though.
The pop psychology term for this is the Dunning-Kruger effect.
> zero experience in building a major service that custodies billions in other peoples' money.
This is exactly what the Dunning-Kruger effect describes. He was incompetent at the task he was doing and didn't know enough to be aware of his incompetence.
What you might be thinking of is the smbc Mt. Stupid diagram [1] which does relate overinflated sense of know-how to a relatively low experience level.
That is distinct from the DK effect in important ways. Of course it doesn't help that if you google images for DK effect 19/20 first results will be a bastardisation of the Mt Stupid comic.
This is a common misconception. Wikipedia has a pretty good write-up. Quoting the first paragraph:
> The Dunning–Kruger effect is a cognitive bias in which people with limited competence in a particular domain overestimate their abilities. Some researchers also include the opposite effect for high performers: their tendency to underestimate their skills. In popular culture, the Dunning–Kruger effect is often misunderstood as a claim about general overconfidence of people with low intelligence instead of specific overconfidence of people unskilled at a particular task.
The original paper [1] was explicit that this was domain-dependent.
> The point of the DK effect was even with experience, the disparity between ones competence and awareness of ones relative competence doesn't improve.
I don't think this is consistent with the literature. In the studies I'm familiar with, there is the classic Socrates effect that the people with the most skill are aware of how little they know and tend to underestimate their relative performance. So it improves significantly, but there's a slight over-correction.
Quoting the original paper:
> improving the skills of participants, and thus increasing their metacognitive competence, helped them recognize the limitations of their abilities.
[0] https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
It’s that “one simple trick (what they don’t want you to know)” kind of predatory advertising that seems to be what ensnares people.
It’s adjacent to the hustle culture you see on social media where people with gleaming white teeth tell you they’ll make you rich
Consider it a VC investment. First, you gave to either understand the underlying technology, or someone you trust have to understand it sufficiently to be able to say "this is bullshit", or "this is a great novel idea that makes a lot of sense".
Then you invest a bit of your really disposable income in it and don't touch it for a couple of years. Eventually you sell once you're happy with the price, or you forget about it and check few years later.
Edit: also, it really is down to luck too. An idea might be great, but the people behind it can be scammers. Etc. Crypto is(or was) a very high reward, very high risk game.
And for God's sake don't invest your life's savings in crypto!
Arguably the entire monetary system is also kind of like that - but it's got the benefit of true utility outside of speculation. It's a shame that most of the interesting crypto-as-money stuff - smart contracts, accessible to everyone financial APIs, pseudo-anonymous payments etc, has been completely dwarfed by the crypto-as-investment situation. Maybe it'll shake itself out long term, but I suspect the fundamental problems of unregulated "money" will be inescapable.
It turns out there's a reason we have financial regulation.
That's about as big as it gets, and pretty well explains the long legs this con continues to have. A lot of marks out there.
The only thing bigger would be an interstellar "galactic-coin". God. I can only imagine the carnage. Seems like a great premise for a sci fi story.
The ones I think are truly scams are the "stablecoins" and "exchange tokens", which are nothing more than a fiat currency offered by an entity smaller than a government with less accountability than a government, and no way to ensure the value/supply/demand of their coin. So yes, I think FTX was a scam to the extent that they traded FTT while printing or consuming it however they liked.
Also I did put investment in quotes. I don't consider it an investment like stocks of a well established company, but if you put money in a security and you can reasonably expect some return at some risk it is an investment.the main difference is that with gambling you play against "a house". A single entity that controls "the market". With crypto, you can take your security and sell it to anyone, or buy stuff with it.
And no, I haven't robbed anyone, I haven't forced anyone into it to buy at gunpoint. I haven't bought in by using secret knowledge. And If you think crypto is both a gamble and a ponzi I wonder what do you think about forex. If anything that looks a lot more like betting as 99% of forex "brokers" don't actually buy/sell for you, but you bet against them.
On Forex I lost £3500 when the UK brexit referendum went the other way than I predicted. Was I "robbed". No, I made a bad "investing" decision.
Have you never lost at a stock market either?
> Then you invest a bit of your really disposable income in it
Sorry, but I find it a bit funny that in your "winning strategy" you seem to invest on the second step regardless if you in the first step ended in the "this is bullshit" or not. (full disclosure, so far, every crypto thing I have seen has fallen to the "this is bullshit" bucket in my opinion. But I guess my "if it looks, walks and smells like bullshit, don't touch it with a ten foot pole" is not a winnig strategy.)
Perhaps this is my failure to express this clearly, but I thought it obvious you don't invest if you think it's bullshit.
> all crypto is a scam
Most people think SBF spent all his customers' deposits on private jets and luxury condos, and blew the rest on shitcoin bets that went bad.
But despite the insinuations of prosecutors, the PJ trips just don't add up to much in the scheme of things, and the real estate is still there and can be sold.
Yes, some shitcoin bets were bad, but they're offset by investments that paid off like the Anthropic stake.
It's likely that the only haircut depositors will have to take is the billion dollars in bankruptcy lawyer billings.
> the bloody Washington Post told you it's either a Ponzi or a pyramid scheme in 2015
If you put in $10K when WaPo told you it was a Ponzi, you'd have $1.6M today.
Maybe next time the bloody Washington Post gives you investment advice, you should do the opposite.
I did and I had significant losses. What does that say about your statement?
Holding is about the same thing as buying but with no transaction cost.
https://www.washingtonpost.com/news/wonk/wp/2015/06/08/bitco...
> The thing is, I don't actually use it. I just hoard it. I'm waiting for some greater fools to push up the price by using theirs.
This is the fuel that drove crypto. Yes it's a scam; I'm just hoping others will buy in after me and I can cash out with their money.
Obviously there's still investment bubbles - but underlying it all is ownership in a corporation.
Fundamentals define a floor for stock price, but above that it's all vibes. Which is fine, as long as we're on the same page.
On the other hand, buying crypto"currency" becomes ... just that. It sits there until you sell it to someone else.
In other words, if you rolled back all transactions in a stock ever made you'd end up with a positive sum totaling dividends paid out. If you rolled back all Bitcoin transactions you'd end up with a big fat zero. Minus, in both cases, transaction fees but while it's a mere convenience for stocks it's inherent in Bitcoin which makes it a negative sum game and as such a scam.
> gold has a source of revenue besides the investors; namely, the purchases by consumers like jewelers and industry, who take gold out of the market (2/3 of the production) for uses other than re-sale. When one buys 1 oz of gold, one gets a chip of a metal that one can sell to those consumers, and thus obtain some money that does not come from other investors.
The argument for crypto, etc is the same. There are consumers who want to make purchases, use contracts, etc.
Yet we didn't conclude only from this all crypto is a ponzi.
That all crypto is a scam clearly comes from the fact it is a negative sum game. When you have a game where you can tell which set of players in total are going to lose and which set of players in total are going to win without knowing the rules of the game -- that's clearly a scam. All you need here is any commodity with baked in transaction fees. The exact same would be true if you traded with plastic poker chips but you needed to pay someone a fee whenever you bought or sold one. Indeed, reviewing the process with such chips makes it more clear, stripped of high tech mumbo jumbo.
Stolfi argues all crypto is a Ponzi because 1) people invest into it because they expect good profits, and 2) that expectation is sustained by such profits being paid to those who choose to cash out. However, 3) there is no external source of revenue for those payoffs. Instead, 4) the payoffs come entirely from new investment money, 5) while the operators take away a portion of this money. Our argument in the previous section was 3-5, you need to add 1 and 2 for it to become a Ponzi. https://ic.unicamp.br/~stolfi/bitcoin/2020-12-31-bitcoin-pon...
There's a seller for every buyer, and the company does not care about it any more than having happy owners is good.
Investment in the form of bonds is another thing entirely, that's purely capital.
In 1999 Harry Markopolos had informed the SEC Madoff was running a fraud. Yet it took until the 2008 financial crisis for Madoff to be exposed. I am sure you've made quite some money if you invested with him in this time period.
Nevertheless not all cryptocurrencies satisfy the above. The prime example being Ether. In the last year it has experienced -0.186% circulating supply inflation (i.e. it's non-dilutive to its holders) [1]. While the network has captured around USD 6.5M per day ~ 2400M per year in fees due to its usage as settlement layer which are paid to its stakers. Basically, it's cash-flow positive and does not rely on greater fools to sustain its economics.
[1] https://ultrasound.money/ [2] https://charts.coinmetrics.io/crypto-data/?config=JTdCJTIybm...
Additionally, the fees of the network can only be paid in ETH, which means that any use of the network implies ETH demand.
Whether people transacting on the network care strongly about the costs vs alternatives to create a proper link with fiat is not so easy to show because there isn't always a direct 1-to-1 correspondence between services (and there are switching costs, too) - so the "inherently priced in fiat" is tough to show, I think. Also, being priced in fiat might still not create demand for Ether from fiat holders - that comes from outside demand as per the above.
Demand to settle a transaction on the network is demand for ETH. Because the base_fee of a transaction is burnt, destroyed, so ETH needs to be acquired to use it as a settlement layer. Much in the same way to how heating your house with a gas boiler is demand for gas. Similarly, when natural gas prices skyrocket (cue Ukraine invasion), alternative forms of heating start to look more attractive, and consumers may change their behaviors lowering the thermostats. In the case of Ethereum, alternative settlement layers will look more attractive or some users may lower their use. The same mechanisms are in place. I agree though that the relationship is not linear, that's not what I implied. Simply that the revenues of the network are priced in fiat, because the price is set by an auction to include your transaction on the scarce blockspace. And given at least some users will be sensitive to the price of the transaction in USD they will, at the margin, set the prices for a transaction in USD and therefore the fee revenues of the network.
By the way I appreciate you engaging rationally on this topic in HN. Not a common sight when discussing anything related to crypto but much appreciated.
I agree that there can be some link based on the utility of the network and with less of a speculative frenzy it might actually be stronger now. Not dissimilar perhaps to (other?) commodities, which have some link to economic activity but are not directly producing the activity themselves (and they can also have speculative phases). And commodities also have conceptual issues around their use in long-term investment for that reason (but at the same time they exist and trade).
I don't even think SBF had the book-learning, just intellectual arrogance. "I don’t want to say no book is ever worth reading, but I actually do believe something pretty close to that. I think, if you wrote a book, you f---ed up, and it should have been a six-paragraph blog post."
"I could go on and on about the failings of Shakespeare ... but I really shouldn't need to: the Bayesian priors are pretty damning. About half the people born since 1600 have been born in the past 100 years, but it gets much worse than that. When Shakespeare wrote almost all Europeans were busy farming, and very few attended university; few people were even literate—probably as low as ten million people. By contrast there are now upwards of a billion literate people in the Western sphere. What are the odds that the greatest writer would have been born in 1564? The Bayesian priors aren't very favorable." [Going Infinite, p29]
Now I get that Shakespeare doesn't appeal to everyone and is definitely an acquired taste, but to judge his work on probability when the work itself is right there to judge on its own merits is like the joke about an economist who sees a hundred dollar bill on the street and says, "If that were a real bill, someone would already have picked it up."
He also dismisses the "plot twist" in Much Ado About Nothing (when Beatrice asks Benedick to kill Claudio) as "illogical" and the province of characters who are "one-dimensional and unrealistic" because "I mean, come on—kill someone because ... his fiancée is cheating on him?" As if no actual human being had ever killed out of jealousy, when it's usually one of the main motives for murder. It's like he's visiting from another planet or something.
I don't mean to lower the tone, but honestly - what an absolute bell-end!
He's visiting from planet Adderall. If you have $26 in your pocket then you're a tweaker but make it $26B and you're an eccentric genius.
Blame the "mainstream media" all you want but as long as we refuse (for good reason) to give audit power to journalists, mainstream or specialist, you'll keep reading positive pieces about frauds if they stay hidden purposefully.
I'm not sure why you would have wanted to NYT to destroy every company it interviews just for the sake of it. Wouldnt they need proof ? And how do you get them, when they're hidden by a conspiracy ?
Plus, the police in the US, Hong Kong and the Bahamas found nothing and waited for Coindesk to publish a leak by CZ, a competitor, to start looking...
I say that because at the peak of the crypto fever I couldnt distinguish SBF from, say, the CEO of Kraken, and I suspect it's hindsight convincing you something could have been done.
The FT did an impressive investigation of Wirecard, for example. There is a difference between destroying a company and making a couple of common sense questions instead of parroting whatever the interviewee wants. Some basic journalistic practices. It is really not so much to ask.
EDIT: interviewer/interviewee
Again you re asking someth that had been done several times: many people did dig a bit deeper and couldnt find the Alameda hole or the real balance sheets, or the parents siphoning millions and all that stuff that took even time for prosecutors to find.
The role of the media isnt to uncover fraud I think, it's to give you a chance to expose one if you know one. If nobody was willing to talk, what s a journo gonna do?
Carreyrou, a personal hero, had tons of witnesses coming to him for instance.
Here's an interview he gave a few months before the FTX collapse: https://www.youtube.com/watch?v=C6nAxiym9oc
Now Tether on the other hand.. I would not be surprised if that has a lot to do with it.
Well, what's the difference between an unhinged, drug-addled loony and an eccentric visionary genius?
The difference is having $26 billion.
Why not call him out on what seems like bullshit? That bullshit has convinced "informed" tech investors like Softbank and Sequoia Capital. And elsewhere at the same time, Andreessen Horowitz is investing $450 million in ape jpegs.
This is absolutely gourmet, Grade A, top quality wagyu bullshit.
Not to mention that a big part of investing in start ups is just ape jpegs with extra steps (i.e. "greater fool" theory).
>>Bankman-Fried’s error was an extreme hubris that led him to bite bullets he never should have bitten. He famously told economist Tyler Cowen in a podcast interview that if faced with a game where “51 percent [of the time], you double the Earth out somewhere else; 49 percent, it all disappears,” he’d keep playing the game continually.
https://www.vox.com/future-perfect/23500014/effective-altrui...
One big factor is who your parents are. SBF coming from an upper-class background, that tilts the scales towards eccentric genius. After all, we know that the children of these families are all extremely special.
-- Howard Payne (Dennis Hopper), Speed, 1994
https://web.archive.org/web/20221027181005/https://www.sequo...
Is he just completely incapable of reading the room, or is it a lvl 10 cynical FU?
SBF has an impeccable pedigree, so the thought that he was a Michael Fenne type was never even considered. Why would he lie, when he could live an honest life and be fabulously rich and comfortable (Jane St, wealthy connected parents, etc)
It is not brought up too often, that often one of the most important differences between them and the viewer of mainstream media is, that this person is vastly more ruthless with regards to ethics.
> Musk claims to be self-made; he moved to Canada at age 17 with $2500 and worked his way up from there. For a while he supported himself by cutting logs, Abe Lincoln style. Nobody paid for his college and he took out $100,000 in debt. Musk’s father invested $28,000 in his first company, but Musk dismissed this as a “later round” and claimed he was already successful at that point and would have gotten the money anyway. The total for that round was $200,000, so Musk’s father’s contribution was only about 15%.
> Obviously there’s still some sense where he benefited from a privileged upbringing or whatever, but in a purely business sense he’s mostly self-made.
- A scammer (unethical, independent of intelligence)
- Not smart at all
I do not understand how someone see his actions and concludes: he is book smart only. Especially since he has expressed anti-intellectual views.
EDIT: expanded, removed non-charitable
But not so stationary, because then you were not visible enough
and if not why?
* Trains are not constant, they come more seldom
* Trains are _extremely_ predicable. Cars are the opposite. This is why trams in i busy inner city are more safe than cars. You know exactly where that tram is going and at what speed.
Similarly, not for a freeway.
Where some feel the balance is wrong, is at local-level streets. Today the assumption in most places is that cars have total right of way, and pedestrians must keep clear. It doesn't have to be that way. In a residential area, it's quite feasible to say all road users have equal right to use the space. And in that circumstance, put the onus on the car user (wielding a heavy, dangerous weapon) to not hit other road users.
Aha! you say, there is a perfectly good subway right there! Why don't people take that? Because the MBTA, our transit agency, is a notorious disaster. I won't load you down with examples here, but you can google e.g. "MBTA dumpster fire" or "what is wrong with the MBTA" and soon you'll know all you need to know.
I am a little bit hopeful that Philip Eng, the former head of LIRR and new GM of the MBTA, will be able to turn it around. He really seems to mean business, and he's an actual engineer with experience running a railroad. The old GM, Steve Poftak, was mainly qualified by having an MBA, having the right ideological positions, and knowing the old governor. I don't think anyone is going to miss him.
Getting offtopic, but isn't this more an indictment of America's insane car-centric culture? It's ridiculous that you see a major thoroughfare going through a heavily populated zone which is extremely unsafe to cross yet still laugh at students which "almost get hit by cars".
https://www.ft.com/content/eac0e56c-f30b-4591-b603-f971e60dc...
It kinda makes me sad that he fucked up doing some unrelated shit.
https://www.thefp.com/p/humiliating-cross-examination-sam-ba...
“Did you say in private, ‘Fuck regulators?’ ”
“Did you call some customers ‘dumb motherfuckers?’ ”
“Did you fly to the Super Bowl in a private plane?”
“Most FTX customers did not have a line of credit, correct?”
“Do you deny that Alameda had a $65 billion line of credit?”
And on, and on, and on.
Under the circumstances, SBF’s wisest course would have been to just say yes—or yep—to her questions. And sometimes he did that. But just as often, he chose to dance around the question, to quibble about the phrasing, or say that he couldn’t remember the details. And every time he did that—every single time—Sassoon projected an email or video or a spreadsheet onto the screen, showing that he had done exactly what she was accusing him of doing. Which then gave the jurors another look at the evidence while reminding them that SBF was being something less than forthright. You’d think this MIT graduate would wise up, but he never did.
(He even equivocated on whether he had taken a private plane to the Super Bowl—to which Sassoon responded by presenting a photograph of SBF fast asleep in the embrace of a comfy chair on a private jet. In the overflow room, we burst into laughter.)
It would have had to have been around 10% if it was in state court in many states, because of the way lots of state bail systems work.
The federal system is very different.
His defense was always fighting a losing battle here, and likely would have recommended he also try to get a plea deal rather than forcing a trial with this probable outcome.
The Feds had no sufficient incentive to agree to a lesser set of charges, and SBF had no incentive to plea guilty to the exact same set of charges he could instead demand that the government prove beyond a reasonable doubt, which at a minimum would delay the process.
[0] https://nitter.net/innercitypress/status/1709208392516923435...
He had good lawyers around and immediately after the FTX collapse; he very publicly fired them because they wanted him to stop tweeting extensive descriptions of his crimes as a coping mechanism.
Which was going to be a problem for him no matter how good of lawyers he got later.
Oh, he definitely had people to blame, like the FTX lawyers, it’s just that he got caught lying or dancing around the truth so frequently that nobody would believe him.
1. Binance / CZ (Binance's CEO)
2. Caroline Ellison
3. Sullivan & Cromwell LLP (https://www.sullcrom.com/)
4. John Ray III (FTX's bankruptcy CEO)
At least he wasn’t playing League of Legends on the stand. That’s a small win, I guess?
In that case, it's even funnier because the defense knew the prosecution had all of those things before he was even asked those questions.
But my understanding is, they’re not obligated to turn over evidence that is not part of their case and is only used to rebut a witness’s testimony. Which would cover the stuff they used to contradict SBF’s statements on the stand.
Can someone clarify? (Sorry, “add color”.)
If I was on a jury where the defendant pulled that, I would want to go up and punch him in the face. Tiffany was restrained. Her notes said she only wanted to slap him.
Unless someone is demonstrating their voice for identification, I cannot see why someone can be compelled to just "read stuff".
An example... a presumed murderer is on the stand. You hand them paper. It says "I murdered someone".
Are they expected to read it?!
And further, as a juror, why would it enrage you to not see him comply? You say on a jury, you'd want to attack the defendant, but at that point you should not believe he is guilty, or innocent!
So, would you be upset if an innocent person, refused to read statements maligning himself?
https://www.stimmel-law.com/en/articles/testifying-trial-how... (search for "would you read the first paragraph")
https://law.utexas.edu/wp-content/uploads/sites/34/2016/09/4... (search for "would you read the part")
https://www.patrickmalonelaw.com/useful-information/legal-re... (search for "would you read")
https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/6141/index... (search for "would you read")
https://archive.epic.org/free_speech//cda/lawsuit/transcript... (search for "would you read")
https://www.supremecourt.ohio.gov/rod/docs/pdf/8/2023/2023-O... (search for "would you read")
You'll also generally find examples of this if you're willing to sit through long cross-examinations such as e.g. the Murdaugh case.
Prior to the 20th century, fewer people could read. And on top of that, you couldn't just copy a sheet of paper easily.
And you wouldn't want jurors to handle evidence much, I suppose.
So I guess in this context it makes more sense. The reading ensures everyone knows what is on the paper, and of couse, since it's been happening for centuries.... it's legit.
Thanks for the urls.
He said in effect, I never said that we would avoid clawbacks, the lawyer made him read a thing HE WROTE that said they would avoid clawbacks.
Theatrical? Maybe.. but also he sat on the stand and lied, they made him tell the truth.
Remember that SBF never had to take the stand at all -- he could have pleaded the fifth and not testified; which is almost always the right thing to do. But once he decides to take the stand, the prosecutor gets to ask him questions about all the evidence they've collected -- which includes asking him to read things that he wrote or approved of.
He must answer questions, I find it bizarre he must read anything aloud, even if he wrote it. This is pure theatrics.
I wonder where his lawyer was.
I could try to come up with reasons that this rule is valid. But I guarantee you, EVERYTHING in the legal system has been litigated and discussed ad nauseum, often over hundreds of years. If lawyers for the defense thought that reading relevant evidence out loud was unfair, they would definitely challenge it; and maybe it has been challenged. If SBF's lawyers think that was unfair, they can still challenge it on appeal, saying that it's illegal or unfair or whatever. Regardless of all that, the current rules allow this behavior, and so the judge allows those kinds of questions.
Within those rules, is the prosecution's use of that rule theatrical? Absolutely -- that's their job: to persuade a bunch of normal people, that the person on the stand is guilty. Persuasion of anybody always requires both rhetoric and logic.
> Weird. I don't believe he even had an obligation to read any of it.
they're very clearly saying that they believe that under the current legal system, the "theatrics" are not allowed.
Here's why it seems reasonable to me. Imagine the counterfactual: If the prosecutor wants to ask him questions about that text without having him read it. If she reads him and asks him a question, he can just say "Is that what it says? I don't remember that." Then she has to hand it to him for him to read, point out where she read from, and give him a chance to read it, and then finally ask her question again. And if there is more than one section, or even more than one question on the same section, then the paper has to go back and forth.
If he reads it, then it establishes several things at once: The jury has heard the text that the question is going to be about, the defendant has read the original text and also has access to the context in order to answer questions, and the defendant has verified that what was read is what was written. It makes the whole trial go more smoothly, it's relevant to the trial, and it's not inherently insulting or humiliating (unlike cartwheels or farting on command), and doesn't fundamentally change the outcome of the testimony.
Maybe a real lawyer (or law historian) would have more to say; but in any case, defense lawyers have had hundreds of years to raise objections, and they haven't, so my "Baysean prior" is that there are probably very good reasons for the rule being the way it is.
ETA: Another advantage is that how the defendant reads the document, and their reaction to reading it, is part of the evidence the jury will need to weigh up when forming an opinion of the witness -- as the situation here described showed. And of course, remember that the same thing can be done by the defense to witnesses for the prosecution. It's not a tool that favors only one side or the other.
I mean, maybe? If you claim you can't be the murderer because you were at a cartwheeling convention, you probably will be asked to show that you can do a cartwheel.
The judge will decide if the request is relevant. Your lawyers will object if it isn't.
he agreed to take the stand, he agreed to everything. what would the lawyer object with "your honor, they're making him read" lmao
This is a criminal trial, a formal procedure society uses to determine the course of someone's life. Dozens of people, including me, are devoting several weeks of their lives to making a careful determination of guilt or innocence. His entire defense appears to be that he acted at all times "in good faith". He just spent a day on the stand testifying to his good faith efforts to run his company. Then he turns around and cannot even follow the simple requests in the process as we try to determine his guilt or innocence. Where the fuck are his good faith efforts in this testimony? Of course I am not going to actually attack the defendant, but now I have to work extra hard to separate this childish behavior from the actual facts of the case, as I deliberate on the charges.
Why did he take the stand at all?
Best case: the situation gets substantially better
If you like to take risks, the answer is obvious.
In fact, even talking to police has the possibility to make you better off for example if you can wrongly lead them to not think you're the suspect.
Lawyers are there to make sure the police do their job
Especially after the disaster that was the evidentiary hearing where he offered some testimony without the jury present. (The judge wanted to see if what he wanted to testify was allowable)
During that testimony (where he was under oath), he rambled, misinterpreted questions, gave evasive answers and generally acted like he did in some interviews.
On the Friday, with the jury present he actually told his life story (to humanize himself) and answered mostly softball questions, before ending his direct with reframing deflections of the evidence and other people's testimony.
It might be easier for you to work from the viewpoint that SBF ran a cult. What sort of person starts and runs one? How do they treat possible recruits? How do they treat unbelievers? How do they treat neutral outsiders? Who is in the "inner circle"?
It is my belief that SBF felt he could negotiate his way out of trouble. That he just had to talk to the outsiders like he talked to his believers and then everything would be fine. The prosecutors kept showing to the jury what he actually said to his inner circle - and that sank SBF's case.
Great interview (available as podcast and on YouTube)
https://www.intelligencesquared.com/events/the-rise-and-fall...
For the book to sell, he had to release it now, while the story is ongoing. But that means he doesn't have time to rewrite the whole thing to get the tone right and pretend he wasn't charmed.
So either he's pretending he was charmed by SBF so that he can pretend the book makes sense, or he really was charmed. Either of these outcomes boosts his book sales.
Lewis believes what he needs to believe to sell his book. Is that a coincidence? Maybe.
I don't think it's lack of wisdom but rather pathological hubris and a God-Complex. I've met kids like SBF at MIT. Very smart but at some point they think the rules don't apply to them. The've never failed before so why would they start now. After all, he was like the youngest billionaire, rich parents, good grades, top schools. Everything has gone his way so the thought of admitting failure was out of the question. The defense also took this weird strategy of painting SBF as incompetent manger who had no clue what his subordinates were up to. Who knows, maybe that will get softer sentencing.
TBH I wouldn't be surprised if he gets out after 2-3 years on "good behavior". those political donations have to count for something. He very well may have the last laugh.
Let's pretend that Congress legalizes marijuana. The folks still in prison who had been convicted of selling or transporting it would not get released - unless the statute removing it from Schedule 1 also specifically required releasing those already convicted.
0: https://www.kohlerandhart.com/blog/2023/03/15/how-is-good-be...
Which is exactly what representatives from Facebook, Google and Microsoft did on trials and when being questioned by congress
To be exact, they weren't trials; only hearings.
https://www.youtube.com/watch?v=gRelVFm7iJE
https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor....
Personal criminal trials hinge quite a bit more on "is the defendant personally likeable/credible" than a civil trial involving a multinational corporation.
Edit: I remember my wife telling me this during her time as an Advocate's Devil.
What does such role/job entail? It sounds like being a drill sergeant on a lawyers' boot camp.
The process is known as devilling but, you might expect, this means different things in different parts of the UK:
I think there were potentially two problems. First, for the previous 10 years, lying and taking massive risks actually did work for him: Even if some people became disillusioned and stopped buying what he was selling, he could just walk away from them and start working with people who would.
Secondly -- well, what else could he have done? It's a bit like back when we saw those AIs playing Go or Starcraft or whatever at the point where it was clear they were going to lose: They'd just start making random moves, because terrible moves had as much chance of winning as "minimize loss" moves.
There's an interesting article I read which is half book review, half critique of SBF and "Effective Altruism" (EA), that has some interesting connections[1]. Basically, EA encourages "cost / benefits utilitarian analysis" thinking; every time SBF lied (or committed fraud), he could tell himself that it was actually moral because it maximized some other good towards thinking people somehow. It also encourages poker-type gambling in some circumstances, where it makes sense to take a bet where you lose 75% of the time, as long as the potential payout is larger than 4x.
And if that article's reading is right, FTX actually had a profitable business. All they had to do was sit back and take x% of trades and they would have been fine. But that wouldn't have been a huge massive multiple that SBF was looking for, so he went in for a bunch of poker-style bets with his customer's money -- ultimately in the name of making more money to give that money away. (And he did actually give a load of money away, even when it didn't make financial sense to do so.)
SBF's choices were:
1. Accept that you're going to jail for a long time no matter what, and try to minimize the damage. Maybe you can cut your jail time in half.
2. See if you can weasel your way out of it. Maybe your jail time is a bit worse, but maybe you don't get any at all.
First of all, he'd always been able to do #2 so far, so why would this time be any different?
Secondly, #1 means a huge emotional downside for current SBF; #2 only means a potential downside for future SBF. The attitude he got into, where he screwed everyone else in favor of "current SBF", carries over into screwing "future SBF". So there's a sort of poetic justice to it.
[1] https://www.lesswrong.com/posts/AocXh6gJ9tJC2WyCL/book-revie...
After interacting with professional managers with degrees from supposedly illustrious institutions for years during my career, I don't see a good basis for this expectation. What is more fascinating is how the professional management class, as incompetent as they are, have managed to gain the reputation of wisdom and competence in the collective subconscious.
Have they? It's pretty common to hear people complaining about "clueless MBAs" here and on other parts of the internet.
When do the parents go on trial? I can't see how they make it out of this without at least having all their ill-begotten assets stripped.
edit: Also seeing 110 years, TechCrunch said 115 here: https://techcrunch.com/2023/11/02/sam-bankman-fried-found-gu...
I'd rather go to prison than go on probation. I know a cop that feels the same way.
The people that think he got off easy don't know how awful probation is.
This is from NC, but look at "Common violations": https://www.browninglonglaw.com/library/common-violations-an...
Miss an appointment because of a car accident? Probation violation.
Miss a court hearing due to traffic? Probation violation.
Don't pay fines or restitution because you're broke? Probation violation.
Miss community service because you're sick? Probation violation.
Not employed because the economy is in the shitter and no one will hire a felon? Probation violation.
There are so many ways to get fucked that are out of your control and the punishment can be prison anyway.
So it's all the downsides of prison - because you can still end up there - but with a bunch of extra life disrupting headaches that are super stressful because the consequences are harsh. And you have to pay for all of it yourself.
Like I said, I know a cop that would take prison over probation.
A cop.
Isn't snark supposed to be against the rules here?
Why do you think the convicted (their representation) push for probation over jail time?
Probation sucks. The only thing it sucks less than is prison.
Source: friends on probation who have changed the way they live and friends that didn’t.
Yeah. The fact that they're in probation in the first place is probably because they have a hard time acting like adults in the first place and haven't past the stage of "kid throwing a fit" except in an adult's body
> The people that think he got off easy
He got off easy, give me a break..
FTR, I’ve been on probation and therefore must vehemently disagree with your uninformed second-hand opinion.
This strawman fallacy ruins any credibility the rest of your comment might have had.
I don't think that would work today, but what we have today doesn't work either.
Fence in a few hundred thousand acres of wildlands.
Send sentenced criminals in with a minimal backpack of survival gear, a waterproof survival manual (including a minified calendar), and their exit date and fingerprints engraved on a piece of metal (maybe their firestarter).
You showed repeatedly you didn't want civilization, so here - you get what you chose.
Man the walls with military or national guard troops who rotate out regularly (makes it hard to corrupt them) - come within 500 yards of the wall (interior or exterior) anywhere but a defined ingress point and you'll be shot after due warning.
Approach an egress point from the interior with any other people and you all get shot. If you can't show that it's your exit date promptly on reaching the egress point, you'll be given five minutes to get clear or be shot.
I'm no longer as convinced it's a good idea, and I'm sure the logistics are massively harder than I'm making them sound. It's certainly harsh and merciless.
Still - there is a certain elegance to it.
It is a very Heinlein plot device, now that I think of it.
I think the concept works much better if it's wilderness, though. Even a ruined, abandoned city has an endless supply of the artifacts of civilization, so those imprisoned don't really get to understand what it is they've chosen.
1: https://coinscreed.com/ftx-creditor-claims-break-50c-as-buye...
Conversely, it’s a private company and scarcity of opportunity to get in is also a thing. So it’s entirely possible someone will pay more than the previous round just to get in.
Basically we don’t know until the investment bankers have done their jobs.
I know zero details on where exactly the money ended up, but I have to imagine someone dumb enough to try and pull this off would have also effectively shredded a huge chunk of the stolen funds.
FTX was an exchange. It was an attractive exchange partially because many things traded there offered tight spreads, ie difference between prices quoted for buying and selling. The tight spreads came from Alameda. Alameda was another entity connected to SBF.
The problem was that Alameda wasn't actually competent enough to quote tight spreads and make money off them. So they lost many to savvier customers. FTX lent money to Alameda to keep them afloat. But that money was never paid back.
There's lots of other things that went wrong. But this is probably the most ironic part: a large part of FTX's clients' lost money went to FTX's clients. (But not the same clients who lost money. And lots of money was lost in other ways.)
Because, at least for Americans, there is a retributive mindset. "You did wrong, now I want you to hurt"; ergo, when it happens, they consider it justice.
As opposed to repairing the victim's situation and/or attempting to reform the actor/criminal into a more trustworthy/desirable member of society.
How could SBF pay his victims back fully if he doesn't have enough assets?
What he said was he had never seen a company with such atrocious record keeping. BTW, the US government would not have charged Sam Bankman-Fried with fraud if the money was all there.
And while John Ray did say they were bad at record keeping, he also said that “This is just old fashioned embezzlement, taking money from others and using it for your own purposes,” he said. “This is not sophisticated at all.”
Yes, many cultures don't have this Old Testament idea about justice, as if they take delight in seeing the prisoner suffering. This is more about sadism than justice.
This is how they can be OK with treating criminals humanely, not focusing on revenge and punishment but rehabilitation, not having the death penalty, giving lighter sentences, etc. Or even to have prisons that look more like motels - like the Nordic prisons.
And if you think the US prison system is bad, wait until you see…. Well everyone else’s except a handful of Western European countries prisons.
Compare yourself to your peers. What's the point of merely trying to be better than Rwanda.
In any case, here you go: "Prison conditions in Rwanda today remain harsh and harrowing – especially for those incarcerated for daring or perceived by the authorities to challenge the government’s narrative. Today Rwanda’s prisons are overcrowded at 174% of capacity – with the second highest incarceration population rate (that is, the number of prisoners per 100,000 of the national population) outside America, according to the Institute for Crime & Justice Policy Research. The institute listed Rwanda’s total prison population at just over 76,000 – out of a national population of a little over 13 million. Rwanda’s prisoners include thousands detained in connection with the 1994 genocide, the report added".
or
"significant human rights issues included credible reports of: unlawful or arbitrary killings; torture or cruel, inhuman, or degrading treatment or punishment by the government; harsh and life-threatening prison conditions"
I think you're under the wrong impression that when the parent said "Rwanda" they meant Rwanda specifically, and they didn't just use it as a stand-in for "well known third world country" with the understanding that such countries usually have horrible prison conditions.
Rwanda also has had a history of murdering vast numbers of folks, very recently, because of religious affiliation.
My point is, what’s up with the ridiculousness of these claims?
Seems like you're pretty far off the subect of the subthread? Have you read what we're discussing in this subthread? It's not SBF specifically.
Even so, if you want to see how it still ties to SBF, see the glee with which people elsewhere on this post comment about "life in prison" and throwing away the key for what is basically financial fraud.
>And if you think the US prison system is bad, wait until you see…. Well everyone else’s except a handful of Western European countries prisons.
That's a pretty low bar.
LOL, next question?
Which is neither here, nor there. I didn't say you made such a claim, or that somebody in this thread did.
Just pointed that it's a be low bar to being content to be better than "90% of countries" when that means being at the bottom of all your western peers.
And that it's especially ironic given than Americans do make superioty claims, quite often, from lowly folks, intellectuals, and artists, to official statements by POTUS.
It IS a low bar, and it IS especially ironic given the expressions of superiority - regardless of whether you or others in this thread share them or not.
Maybe from that perspective it's easier to understand why some other closer-knit societies don't value punishment as highly.
As many folks with problem family have had to learn.
I wonder who told you otherwise.
My comment tries to explain a different mindset to someone who seemed surprised that it exists at all, not directly answering their honest question, but rather trying to create understanding of that different way of thinking.
There's no rebuttal here, because there was no statement that could be rebutted - assuming that was actually a honest question I replied to.
Pretty much all of Europe.
The US are often take as an example of an exceptionally individualistic society - in every sense of the word. It's also one of the most punitive countries in the world (the most punitive by some metrics). It's really not hard to find places that are both closer to the other side of the spectrum and less punitive. Drop a pin on a map.
Or ask something specific, no one here is going to give you a full run down of every European nation's penal system along with the US one for you to compare and contrast.
Sometimes, it’s important to make an example out of criminals, so that future criminals are deterred. Thus, strict punishments are a social necessity.
EDIT: A lot of folks think financial crimes are pretty much victimless crimes, and thus financial criminals deserve leniency. However, just because we can’t see the harm doesn’t mean it doesn’t exist. SBF has probably reduced hundreds of not thousands to penury. Those people will pay the price for his wrongdoing, possibly for the rest of their lives.
"Justice is the ethical, philosophical idea that people are to be treated impartially, fairly, properly, and reasonably by the law and by arbiters of the law, that laws are to ensure that no harm befalls another, and that, where harm is alleged, a remedial action is taken - both the accuser and the accused receive a morally right consequence merited by their actions"
Anyway, a law institution certainly has an incentive to push their own agenda when it comes to the theory of justice.
I think the historical use of justice has nothing to do with the victim being made whole - and not sure that word usage is a useful concept here.
Oh is that why our justice system is so terrible at actually reducing crime?
Many other countries—especially countries nearly as rich as us—manage a lower crime rate with a lower proportion of spending on policing and lower sentencing times. I have full faith we can improve on those systems, too—there's boatloads of evidence showing that financial safety nets invested in over decades is a much more cost-effective way of reducing crime.
Regardless, even in justice theory there are other ideologies, such as restorative justice. This is not just idle windbagging.
We can compare to other countries and see their rates of crime, but such comparisons are difficult to make accurately because you are judging all social differences at once, not just a different legal system. Including things like how much lead has the population been exposed to, effect of poverty and sense of community. Things far beyond the legal system.
Why are you comparing it to a lack of a justice system rather than to a more competent justice system?
> We can compare to other countries and see their rates of crime, but such comparisons are difficult to make accurately because you are judging all social differences at once, not just a different legal system. Including things like how much lead has the population been exposed to, effect of poverty and sense of community. Things far beyond the legal system.
Poverty is absolutely a part of the legal system—it takes the legal institution of private property, for instance, to ensure wealth stays unequal.
Can you ever make them whole? Even if you pay them back all their money, there is the period of time without, the fear and pain from losing it, and similar that cannot be undone. For other crimes, there is often a victim whose state can never be fully reverted. If this is our view of justice, then justice becomes an impossible thing which can never be achieved. Does such a stance risk people eventually no longer chasing what can never be acquired?
SBF did not do himself any favors with his smug attitude that caused the judge himself to scold him several times during his examination. If he was a little more remorseful I could’ve seen some more leniency but the Judge did not like his attitude from what I could read following his testimony.
Would be shocked if he got less than Holmes.
SBFs fraud totals were much, much higher than Holmes, and the federal sentencing guidelines indicate he'll be going to jail for much longer.
A few token condemnations for the headlines is all it takes.
Quite complex certainly
In what way? Deciding the sentence may be complicated, sure; mostly due to the fact that the US system (ideally) wants to be lenient on first-time or very occasional offenders and strict on habitual offenders. (Which isn't always how it works, sadly, due to judge biases)
However, once you receive your sentence, it's relatively simple. You get a charge or multiple charges with a length of stay and an eligibility for parole condition. It then gets marked "concurrent" (time in prison, after the sentencing date, for other crimes counts towards its requirements) or "consecutive" (its time needs to be served independent of other charges). From there, you start with all of the consecutive terms lined up in order of severity and the concurrent ones stacked alongside.
There are sometimes other terms for release, but they're usually enumerated pretty well.
That all being to say, your answer doesn't really answer the person who's asking. It's relatively easy to figure out the release date and minimum parole date from that. In fact, both are usually listed clearly on their sentencing documents.
> This is life in prison, correct? I know he hasn't been sentenced but all counts is easily several life sentences at the federal level.
There is no a sentence yet. Deciding the sentence has yet to happen, so OP's answer to the grandparent is 100% correct: it's foolish to try to calculate the sentence right now, we just have to wait and see.
If anything, you comment goes to reinforce OP's point: you yourself list 3-4 different variables that need to be determined for each charge.
The guidelines are 618 pages long. There are considerations for the person's history, for their pleas, for the # of counts, for the type of crime, for the victim impact, for the felon impact, for the societal impact, for precedent, for the type of intent & hundreds of other things get mixed in to the judgement as well. There's a good reason this will only be complete by March next year.
https://www.ussc.gov/sites/default/files/pdf/guidelines-manu...
Personally, I feel like someone like Allison Mack did way worse crimes than the uggos in the FTX polycule, but I don’t know enough about the sentencing statutes here to know if they’ll get more time or not. I feel like they will, but we’ll see I guess.
Because it doesn't look like justice. It looks like revenge. The US justice system doesn't mete out justice, it provides revenge.
Under a punitive justice system like we have in the US—sure. It doesn't seem to have improved anything at first glance, though.
Meh. This is society taking revenge on an individual by locking him up and offering him no chance for redemption. Maybe that's the best form of "justice" we can do for now, but let's not celebrate it too much.
"This case is also a warning to every fraudster who thinks they're untouchable, that their crimes are too complex for us to catch, that they are too powerful to prosecute, or that they are clever enough to talk their way out of it if caught."
Actually, kind of a twofer, since raising him to be like that was in and of itself unethical.
They are being sued by FTX. For more information, please see https://www.npr.org/2023/10/02/1200764160/sam-bankman-fried-... and https://restructuring.ra.kroll.com/FTX/Home-DownloadPDF?id1=... .
https://www.wsj.com/articles/sam-bankman-frieds-dirty-politi...
In a lot of ways, they are also victims because they now have to do extra work to either defend themselves, or payback the "donation". In the case of the PACs, I bet many of them already spent the money and can't pay it back.
Lastly, these messages always fall a little flat to me. The justice departments always go after and nail these fraudsters that have little actual power and then make a big stink about it. Sam Bankman-Fried, Elizabeth Holmes, Billy McFarland, etc. are all nailed to the cross. Yes, they committed clear and damaging actions of fraud and other crimes. But higher level fraudsters, like those in industries that are much more protected and in positions of actual power and influence, do not get touched. For example, Steve Cohen gets to own the New York Mets yet he clearly committed insider trading for years, if not decades (https://www.youtube.com/watch?v=1szayJV505M). Several of his high-level employees were convicted, but he remains untouched. There's other examples of people like this that are actually intelligent (unlike Bankman-Fried, Holmes, etc.) but still sociopathic, and they are able to weasel themselves into tight nets of power such that the justice department doesn't or can't touch them.
Holmes got 9 years, but her actions had severe real world effects on people. Is that the ceiling for SBF?
But considering that he was found guilty on all accounts and after the mess he was making during the trial, his sentence will most likely be no good news for him.
He is also kind of being made an example of to encourage more due diligence in the industry. Being bad at business is one thing, but handling billions without basic risk management is basically gambling with customer funds.
He actively gambled with customer funds, not just basically did because of poor institutional controls.
I believe the evidence in this trial will support a civil trial against him showing that he pierced the corporate veil, and that he was personally tied to FTX with some of his purchases with company funds.
As for what happens between conviction and sentencing, the typical law answer is: it depends..
He certainly has been in jail for some time already, as he could not help himself from doing stupid things, like contacting witnesses. Maybe it continues, maybe not. Maybe he'll be free for some time after sentencing too. They set a date when he has to show up at the prison.
Until then, it's mostly up to the judge. If he is deemed a flight risk, or continues to run his mouth, he very well may spend the time up to his prison sentence in jail. Though, as he cannot mess with his trial any more and he is not generally a danger to community, he could walk around some more. It depends..
My guess is that he’ll get something closer to Bernie Madoff’s sentence than Elizabeth Holmes. She at least was pregnant at the time of sentencing and her defense was seemingly successful in painting her business partner as the puppeteer.
My understanding is she was convicted for financial bits, not harming people.
I don't care if he does zero year, one year or 100 years. It's not as if he was a killer representing a serious menace on society. With what he did nobody will want to hire him, not even as an accountant for a small town's tennis table club.
Sure, he's a despicable person who was using stolen money to rent private jets to have amazon shipments sent to him in the Bahamas and he didn't hesitate to lie in court by pretending it was all the fault of his co-conspirators (co-conspirators who pleaded guilty btw) but all that counts is that now he's not going to scam people anymore.
The two private jets he bought, the luxury houses in the real estate in his parents name (another trial coming for his parents btw), his scamming company all have been seized.
The supposedly "billionaire kid genius", his parents, and his effective altruism guru (who bought a $15m mansion using stolen funds donated by FTX and who was part of the Alameda scam) all got exposed.
The true color of these people has been revealed.
It's game over.
Then there are a BUNCH of lessons to learn here. You kinda touch on a couple: "kid genius", "altruism guru", "bahamas" and so on. So how can we all learn from this? 1) there is no fast money?, 2) turtle wins the race?, 3) regulations are there for a good reason (in most cases)? 4) when you see athletes promote financial products run away?, and many many more..
He's never going out of jail in his life. Sentencing is expected to be harsh, remember he had his bailed revoked for witness tempering!
On top of that, he's been convicted on 7 counts, but there's another trial in March 2024 for other felonies. He will spend the rest of his life between prison and the tribunal.
Both his parents are likely to be sentenced to jail as well.
I feel like for the most part Holmes had theoretical effects on people – tests that were fraudulent, but where an equivalent standard test was done at the same time, and so most likely everything was caught. I think the time she got made sense for the level of fraud, but thankfully I don't think her actions ended up being actively harmful to individuals (other than her employees) in almost all cases.
SBF on the other hand has conducted a significantly larger fraud in monetary terms, and caused many individuals to lose significant amounts of money. In a way I'd say these are bigger real-world effects. I think it's possible to conclude that he had a substantially bigger negative impact on the world than Holmes did, and therefore feels reasonable that his sentence will reflect that.
If you add up all of the crimes SBF was convicted of, the max could be 110 years. It isn't that simple. Sentencing is a complicated thing that could be replaced with a simple spreadsheet. Instead, judges have to do the calculations by hand with charts and checklists.
Madoff was sentenced to 150 years.
https://www.robertslawteam.com/blog/2013/05/early-release-fr...
> Federal law allows a credit of 54 days for every 365 days (or one year) of good behavior. To be eligible for early release, a person must be sentenced to more than one year in prison. ...
> The maximum number of days that can be awarded for good conduct is 54. The Bureau of Prisons has discretion to award any number of days less than 54 based on its evaluation of the inmate’s conduct.
The specifics are https://www.govinfo.gov/content/pkg/USCODE-2021-title18/pdf/...
If sentenced to 30 years in federal prison, you'd be serving 85% of that time -- a bit over 26 years (after 26 years, 1404 days will be credited which is 3.8 years).
I wonder if he himself is accepting of the outcome and isn’t already scheming or relying on another all-in gamble.
Perhaps the only one (potentially, and not trying to derail this) might be Donald Trump (but I also have a hard time seeing him accepting a plea deal on the current raft of bullshit around him).
(Not sure what “current raft of bullshit around him implies” but derail ahead)
Trump is no stranger to settling cases and making deals with prosecutors(1)(2) but all cases he’s facing now having such face-losing punishments even on plea that he can’t afford to take any.
(1) https://www.reuters.com/article/us-trump-lawsuit-idUSKBN13D1...
(2) https://www.newyorker.com/news/news-desk/how-ivanka-trump-an...
Allegedly, a lot of the squandered FTX funds went to Alameda, his other company where he made similar bets, except they didn’t work out.
"So this guy is guilty right?"
(10x other Jurors) "Agreed".
(That one "For Fairness" Juror) "I dunno, we're sending this guy to jail for an awfully long time. I think we need to think it over a bit longer."
"Fine, Lets get pizza".
* 4 hours later *
"Okay, we thought about it some more. He's guilty right?"
(11x other Jurors) Guilty.
-----------
At least, I'm amused by the thought of a "reverse 12 Angry Men" style setup, where everyone agrees upon the same premise (that a quick decision is a bad idea for everyone), but the additional time thinking changed nothing.
On a serious note - not sure how much you get compensated on Juries but in Australia it is not that much if you work as a software dev, so staying on a Jury for 8 weeks could mean even not being able to pay your mortgage for some (yes you should have savings but...). I am sure there is a financial incentive to finish these things quickly?
Most large companies do, however.
> When an exempt employee reports for a full workweek of jury duty and does no work for his or her organization, the employer is not required to pay the exempt worker for the week. However, _if the employee does any work for the organization, including checking and responding to work messages/emails, the employee is considered to have worked during the workweek and is entitled to a full week of pay._
So basically if you check your email then you are entitled to the full week anyhow. One mess up and an ensuing lawsuit would blow the whole average year's worth of jury duty savings from _not_ paying your juror-ing employees.
They need a better system. I can’t get a shorter trial. There’s no system to put you in a pool when you are freer.
Larger companies will theoretically pay for a few days or whatever and will, in practice, pay for a bit more. But something like grand jury trials can go on for months and AFAIK there's no obligation for companies to cover you taking those months off while still being paid. In practice, in my personal experience, the government avoids pressing people into service who really don't want to do so for an extended period but they have no obligation to do so.
He wasn't dismissed. The standard was pretty high.
I've been in several panels from which jury selection was being done, and in the screening-for-hardships portion, those type of things were not, in and of themselves, hardships. Its rather the norm for private employers not to pay for jury duty, leaving you only with the rather minimal jury stipend.
I feel like that's impossible to happen in Manhattan federal court. That city's pizza is so good.....
Then again, if you live there, maybe your Pizza standards are just higher?
Edit: Just checked the state website... it's even worse than I remembered: "Trial jurors receive $12 for the first day of service and $20 for each day thereafter. If you serve more than five days, you will receive $40 per day."
I was also paid by the court for attending jury duty (a physical check that arrived in the mail a few months later). It was not very much money (I think around $20 per day) - this money was supposed to cover things like Transport, parking fees and meals. In my case the trial was called off after 3 days so the check was for around $60.
Maybe if you are part time or on a contract it is different.
They are at least prevented from firing you though.
I served on a jury a number of months back, and in my part of the US, they pay $10/day. They ask if you want to donate it to the fund that stocks and maintains the jury waiting area, and 90% of everybody says yes.
If you can show that you'll suffer an undue hardship (like, for instance, financial distress or having to care for a loved one), they'll dismiss you from service and mark you as having served.
I was called for jury duty via email sent to my home when I was studying abroad for a semester, 4,500 miles away.
Unbeknownst to me, my parents requested an excuse from jury duty on my behalf because I was out of the country, which upset me, as I was hoping for the 9,000 * $0.50 in travel allowance...
Seemed like so much money at the time!
I recall his interviews and annoyed tone at uncomfortable questions - made me laugh, just like people on speed.
And absolutely avoid selegiline for "productivity", especially with amphetamines, this will turn anyone into a pathological compulsive person (e.g. a gambler).
To be clear, I genuinely am not advocating for violence, but I'm saying that if he walked free, and if I were to see him just casually sauntering along in NYC, I think I would have an overwhelming compulsion to hurt him, and then I would go to jail, which I don't think I'd enjoy, so it's a much better outcome for me personally if he's behind bars.
Well, upon typing this out, I guess if he gave me the 13 grand that was taken from me, I'd be willing to forgive him.
[1] I've posted about this before, but just to reiterate, not my opinion, but the SEC's https://www.sec.gov/news/press-release/2023-7
Basically, the FTX stuff blew up at the very worst possible time for me personally. I had just been laid off (really fired) from my job in November 2022, and I had naively believed the kind of hand-waivey advertising about Gemini Earn and GUSD being safe, so a lot of my cash reserves were stored in GUSD, but the day that I need to use it to pay for my mortgage, I'm unable to withdraw it because apparently Genesis Holdings was in bed with Alameda Research, which in turn was in bed with FTX and thus SBF was throwing my money away.
Now, I'm one of the fortunate ones, because I didn't keep all (or even most) of my savings in GUSD and Earn; I keep most of my savings in the form of low-risk ETFs (VOO and VTI), so there was never a risk of me being homeless or anything, but I did have to sell a good chunk of them at a loss in order to pay for my mortgage and for my food, and that wasn't fun. The entire ordeal really depressed me, and I've been upset with SBF for the last year for exacerbating an already frustrating experience.
Is this a US thing or what? Don’t keep money you may need in the short term (< 5 years, at least) in stocks. A stock ETF is not low-risk, cash and bonds are.
I'll admit that I definitely should have done more investigating on my end, and I'll take my share of the responsibility on that, but that doesn't absolve the Winklevoss twins and SBF from responsibility. An "obvious" scam is still a scam.
EDIT:
Just to clarify, I actually agree with your point. It's good practice your short-to-mid-term savings in FDIC-insured savings accounts, bonds, and treasury bills; basically stuff with nearly-zero risk. Since the fiasco with GUSD I've been saving my shortish term stuff in treasury bills specifically for this reason (and because they're a bit more tax efficient in a place like NYC).
But of course, when someone personally wronged me, I think I'm entitled to a little bit of vengeful fantasies.
There is no evidence this person is smart in any way, yet some people still portray it as a narrative.
There are dumb people at MIT (and at every institute or company) let’s admit it.
Maybe I watch too much TV, but I wonder how the investment banker was allowed to stay on Jury. I've heard mostly anecdotes that lawyers do everything in their power to get experts on subject matter out of the jury
So they will hold their noses and allow the investment banker if they have to
Didn't HN recently conclude that calculating the 'maximum sentence' as the sum of sentences of the individual convictions is journalistic malpractice? Do better, NYT (they won't).
Given that there were 7 charges and assuming all charges can be served in parallel that's a minimum sentence of ~15 years (why is left as an exercise to the reader).
Looks like your logic is 110/7 = ~15, therefore there must be at least one charge with a maximum sentence of at least ~15 years. But why does that imply a minimum sentence of ~15 years? He could get less than the maximum sentence for some or all of the charges.
In terms of what's likely, from a quick search it looks like the maximums are 20 years for some of the charges and 5 for the others, and 10-20 years is a realistic guess for his actual prison time.
In my limited view of US cases, it often seems prosecutors let off lightly anyone that will testify in return for their whale. Sometimes feels it's more symbolic justice that way than real.
You lose the chance to convict a criminal, you lose your face and the chance to see him behind bars.
You really want the government to decide to re-arrest and re-try you indefinitely if you are acquitted of a crime?
The double jeopardy rule is not stupid.
All of Europe, India, all of the Americas, and any other country that inherited English common law are among the majority of countries on earth that have this protection in one form or another.
Polish law translated: "No criminal proceedings shall be initiated if another criminal proceeding in respect of the same act committed by the same person have been validly completed (ne bis in idem, res iudicata) or are already pending (lis pendens)[19] If criminal proceedings are initiated in contravention of this principle, the proceedings shall be discontinued."
Double jeopardy rule doesn't prevent appeals to a higher court which is what happens in Italy frequently, and it doesn't prevent retrial when there are new legal facts or a defect with the original case.
I don't know why you are so unwilling to research this when it is a very accepted legal principle.
Are you sure that you understand what double jeopardy is? That the government cannot retry your case once a final ruling has been made. Simply put: you can't have two separate trials for the same crime. You can still have the case pass through separate courts and judges through appeals process since many systems allow review of a conviction before it is considered "final".
In all Europe you can be retried if new evidence is found or the previous ruling/trial had formal issues or misproceedings.
In US, this is really not the case, even if new evidence is found it you cannot retry a defendant.
There isnt much value in incarcerating additional people simply for the sake of punishment/revenge. The other individuals are unlikely to cause future harm.
People might scoff at mid-level fraud “doers” getting a slap on the wrist deal for their testimony, but the alternative where you go full scorched earth and fail to get a conviction would be terrible for the defrauded and the system beyond them. Capitalists (i.e. the owners of capital, the investor class, in this case) love a system where you don’t really have to quadruple check that a financial document is valid. Who can blame them? I certainly wouldn’t want to live in a world where something like FDIC doesn’t exist or where fraudsters can easily rip people off with low chances of jail time if/when the operation goes belly up.
The idea is that everyone knowingly involved goes to jail. This way others presented with opportunity to go along with such fraud /know/ there is a very, very real consequence. Rather than "CEO could go down for this but what the hell, I'll go along with it."
It's not retribution, it's justice.
There's a YouTube channel called "Insider" and they have a series of videos called "how crime works" which are part interviews with past-criminals about how their particular scheme worked:
https://www.youtube.com/c/thisisinsider/videos
The videos all have extensive credits and one thing was that very few of the participants actually considered potential punishment/incarceration beforehand.
To this end, perception of the likelihood of being caught is far more important than the severity of punishment when it comes to deterrence.
What prosecutors can do is recommend a sentence and let the judge know that a criminal cooperated. Cooperating typically reduces a criminal's sentance. Ultimately, Federal sentences are decided by three things:
A) The laws of the United States. These can be changed by the United States Congress.
B) The sentencing guidelines (https://www.ussc.gov/guidelines)
C) Prison Capacity (At some point, you cannot send anyone else to jail because the prisons are full)
The prosecution does decide charges to bring forward, so the prosecution can decide to only charge defendants with lesser charges if they cooperate to catch bigger fishes.
If Judges stopped going along with prosecutor's deals, then nobody would be making deals ever again. Usually, judges do honor deals made with the defendant.
The judge will choose where on that spectrum the sentence lies.
edit: From Ars Technica
The five charges related to wire fraud and money laundering carry maximum sentences of 20 years each, while the two securities and commodities fraud charges have maximum sentences of five years each.
i.e. Is SBF going to spend the rest of his life in jail?
The parallel commenter linked https://www.youtube.com/watch?v=kr8gSdJ_Ggw&t=272s , which is a great example. https://popehat.substack.com/p/beware-the-flood-of-trump-sen... is another, if text / blogs is a better medium, or the slightly older https://www.popehat.com/2013/02/05/crime-whale-sushi-sentenc... from the same author.
The judge also previously said, when asked about whether SBF could remain out of jail during just during his trial after his bail got revoked:
> “Your client in the event of conviction could be looking at a very long sentence. If things begin to look bleak … maybe the time would come when he would seek to flee.”
I don't imagine the judge will give him time to get his affairs in order from outside prison, which is something I understand happens (like it did with Elizabeth Holmes)
And look what she did. Evidently had a second/another passport, since she surrendered hers - but was attempting to fly to Mexico on a one-way ticket, with no accommodation planned there.
I wish this sort of thing would happen every time bankers screwed things up. Instead the government bails them out.
So basically Peter Theil caused a run on a bank for no reason other than he got people panicked about their tbill risk ladder. Which by the way want as bad as Bank Of Americas right now.
> On March 12, 2023, a joint statement was issued by Secretary of the Treasury Janet Yellen, Federal Reserve Chairman Jerome Powell, and FDIC Chairman Martin Gruenberg
> stating that all depositors at SVB would be fully protected and would have access to both insured and uninsured deposits
> Regulatory filings from December 2022 estimated that more than 85% of deposits were uninsured.
Where'd that come from? Surely not the government?
https://www.federalreserve.gov/newsevents/pressreleases/mone...
> No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
> Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
Edit: apologies, I should have included this link and blurb in my original comment.
Whole thing was a farce
“Real” banks, government approved ones, have laws governing how much cash to keep on hand, and how to “invest” the excess, etc. SVB did everything by the books and they’d probably have made it through to the other side if there wasn’t a bank run. They just had underwater investments if sold (but they’d be fine if held to maturity).
FTX was literal fraud and they didn’t protect money. They gave it to friends, and sister companies, and made a lot of bad decisions with it. There’s a big difference between that and SVB.
Oh and of course everyone was made whole in the end after SVB
Not to me. All I see is corporations that accept money, do god knows what with them and cause the money to evaporate into thin air. It doesn't really matter how much the government "approves" of the reserves and investments of banks. They're still all the same: literally one bank run away from insolvency.
B: "We bought a house for the founder's parents while they advised ways to hide it and threw millions of dollars at the insolvent-by-design crypto fund of somebody in the boss's polycule."
You: "No difference detected."
For real?
A: "We take customer money and risk it."
B: "We take customer money and risk it."
Just because one puts the money into "safe" investments does not make them any different. It's still a bank doing fractional reserve banking.
SVB: our shitty compliance department bought bonds (a government requirement) with too long of a maturity date to sell in a bank run.
One is incompetent and the other is malicious.
Also fractional banking is literally required by law.
SVB didn’t break laws, just as you said, didn’t properly manage risk. If there was no run, they’d have made it through, just with low earnings expectations.
FTX took customer money, gave it to friends, and used sticky notes and slack channels for accounting. FTX spent customer funds on beach houses and political ads and god knows what not on government bonds with a slightly too long maturity.
They literally backstop bank runs with public money.
> all of their customers were made whole
They shouldn't have been. They loaned money to the bank, they accepted the risk of losses. Should've dealt with the consequences of it.
The government should stop bailing out banks every time they screw up. Otherwise they might as well bail out Tether. What's the difference?
> the cryptocurrency goat rodeo where we constantly see large, easily foreseeable losses and most of the “community” reacts by saying that the victims should have known better and bought the speaker’s favorite token instead
That's exactly what they should do in all cases: avoid putting money into these scams. I just happen to include traditional banks into that same category.
You see, the only reason these banks are any different from crypto exchanges is the government will show up to bail them out when things get bad enough. They reason that it's "better" than a total economic meltdown or something.
I think the bank runs become extremely contagious if you do that, affecting the whole economy.
> Otherwise they might as well bail out Tether. What's the difference?
The difference is that Tether doesn't have to follow the regulations trying to avoid bank insolvency. SVB was insolvent by a relatively small margin IIRC. For all we know Tether is 50% hot air.
Let them. Why contain it? Maybe the world would be a whole lot better if people faced the consequences of their choices.
Maybe after enough people lose everything, they'd learn that banks are dangerous and would stop putting their money in them. With less capital in banks, there would be less loans and credit. That means less inflation. Less planet-destroying credit-fueled exponential growth.
> SVB was insolvent by a relatively small margin IIRC. For all we know Tether is 50% hot air.
It's either solvent or insolvent. There is no margin. Banks are insolvent by definition. There is not a single bank on this planet that can cover 100% of its withdrawals. If push comes to shove, the governments will have to step in.
Maybe, but I wouldn't count on any government wanting to try. And it does seem a bit of a economic crisis without a need.
> It's either solvent or insolvent. There is no margin.
I think it matter whether the bailout is for 1 billion or 10. Or even without a bailout, whether depositors get back 95% the next week or 10% after 2 years on bankruptcy court.
He is not wrong technically but it happened so he obviously isn’t correct either.
No he didn't. He created a hedge fund and a crypto exchange.
I love what happened to this Bankman guy. It's what I wish would happen every single time some banker screwed up with our money.
I agree with you though, bankers that are doing frauds should also be prosecuted.
All documentation, marketing, interviews, statements, tweets, general understanding, and government licensing had FTX implemented as a full custodial trust.
FTX promised to hold any funds you deposit in safe, low-interest bank accounts or secured cryptocurrency wallets, ready to withdraw at any time. They explicitly promised to never invest them.
And then Sam broke that promise, stole customer funds and invested them. And it's not like he was planning to pay those customers interest fees if the investments paid off.
That's fraud.
1. FTX got away with this for so long, in part because they weren't subject to the auditing and scrutiny of traditional finance.
2. Volatile crypto prices exacerbated the issues caused by alameda's borrowing.
3. Sam could pretend that FTX had more assets than it really did thanks to FTT, a crypto coin with no inherent value, and an artificially inflated price.
This was a banking problem, sure. But most banks didn't have this problem. The manipulated nature of cryptocurrency markets and the legal gray area it operates in facilitated this scam.
https://www.nytimes.com/2023/11/02/technology/sam-bankman-fr...
via there "share" feature..
Especially since his sequoia profile mentions he thought books useless.
Now, I'm not sure the judge might not decide "If I'm going to give him what's effectively a life sentence, I might as well make an example", like they did with Madoff.
It's not off the table. He may still face a trial on the remaining charges of campaign finance fraud and foreign bribery.
I know Stanford's campus and professorville too, having lived near it for years, but what LA Times reported looks like the ability to use that house (implicitly its Stanford-owned land included) is questionable?
Here's a reference (that's imperfect)
https://www.businessinsider.com/sbf-parents-house-on-leased-...
COWEN: Okay, but let’s say there’s a game: 51 percent, you double the Earth out somewhere else; 49 percent, it all disappears. Would you play that game? And would you keep on playing that, double or nothing?
BANKMAN-FRIED: With one caveat. Let me give the caveat first, just to be a party pooper, which is, I’m assuming these are noninteracting universes. Is that right? Because to the extent they’re in the same universe, then maybe duplicating doesn’t actually double the value because maybe they would have colonized the other one anyway, eventually.
COWEN: But holding all that constant, you’re actually getting two Earths, but you’re risking a 49 percent chance of it all disappearing.
BANKMAN-FRIED: Again, I feel compelled to say caveats here, like, “How do you really know that’s what’s happening?” Blah, blah, blah, whatever. But that aside, take the pure hypothetical.
COWEN: Then you keep on playing the game. So, what’s the chance we’re left with anything? Don’t I just St. Petersburg paradox you into nonexistence?
BANKMAN-FRIED: Well, not necessarily. Maybe you St. Petersburg paradox into an enormously valuable existence. That’s the other option.
He literally told us the problem, at least once, when he appeared on Conversations with Tyler well before all this came out. He said himself that he would fall victim to the St Petersburg paradox:
> COWEN: Then you keep on playing the game. So, what’s the chance we’re left with anything? Don’t I just St. Petersburg paradox you into nonexistence?
> BANKMAN-FRIED: Well, not necessarily. Maybe you St. Petersburg paradox into an enormously valuable existence. That’s the other option.
(When I listened to it at the time, I didn't believe he could possibly believe this, because it's so patently absurd. I even remember exactly where I was at the time that I heard him say this on the podcast, it stuck out so badly. But it turns out he did believe it!)
Still a pretty small portion of the billions total though.
TL;DR: It won’t be the max.
It is still sad that a young person's life is taken away today. I don't think any type of nonviolent crime should get anyone a life sentence, especially not in a prison system as inhumane as in the US.
But if we’re so worried about individual lives, like SBF’s life in prison, what can we do to save the lives that he’s ruined?
Help me understand how letting SBF off the hook could be a net positive for society or how he could begin to repay his debt without indulging in similar activities.
I hope they go after his parents next.
joking aside, glad this joker is going to rot in a federal prison. Even if it's "club fed"
https://abcnews.go.com/Business/sam-bankman-fried-trial-verd...
Some specific links to comments:
> I will still be surprised if he spends a single day in prison though.
https://news.ycombinator.com/item?id=38122135
and several similar comments scattered throughout, that Dems will pardon him. So yes, delusion on HN is quite real. And crypto news attracts a deeply paranoid, cynical sort of mind, who have seen a glimpse of some big conspiracy and can't let go of it.
You also see a lot of people bashing Sam Bankman-Fried’s parents or accusing them of committing crimes without providing any evidence.
Sidenote, I think HN will be wrong on Elon Musk and X as well over the long term (personal opinion of course). But the way the discourse around X has changed on HN is incredible.
When Parag Agarwal was made CEO, everyone on HN complained about the platform and how a subscription model was the way to go. Now that Elon Musk has instated a subscription model, (seemingly) all on HN agrees he's running the company into the ground.
Seems to be happening a lot more often over the past 4 or 5 years.
Or do you feel more that its a wholesale shift?
Donating a bunch of money to a group gives you no power over that group unless they think there is more on the table. When you’re about to get arrested they will cut all ties immediately unless there is an actual obligation to support you.
1) he lied about key details of what would be done with the money people gave him, which is a specifically bad kind of lying because there are special laws for it
2) it wasn't just VC funds that lost money
(Though, Newmann potentially committed fraud with some of the ways that investor money left WeWork and somehow ended up in his own pocket, but that's unrelated)
Sam massively broke the law because FTX customers had given FTX those funds on the condition that FTX not touch them. The agreement was that all those funds would sit in a bank account or crypto wallet until it was time to withdraw.
But Sam and friends stole the customer funds and gambled them away. Nobody would have ever known if the gamble succeeded before a "bank run", but it was still highly illegal.
And investors get a share of the profits if the gamble pays off. That's why they are investing. If Sam's gamble had paid off, the profits would have gone to Alameda, not the customers.
Moreover, Uber has effectively made employees out of many drivers while they were not treated like employees, and courts have forced payments-- that's not like disappearing deposits but since laborers were wrongly under-compensated it's effectively just as harmful.
Had SBF somehow raised say just $1-2b, which seems to be what the gap will be for the recovery, I wonder if today he'd still be a billionaire and out of jail like TK and AN.
This lawsuit was later dropped, so it seems to have been without merit. And it was part of a power struggle that happened on the Uber board after he resigned, not related to anything that happened while he was CEO, or any of the shitty things that Uber did.
> Had SBF somehow raised say just $1-2b, which seems to be what the gap will be for the recovery, I wonder if today he'd still be a billionaire and out of jail like TK and AN.
Well, yes.
But only because he wasn't caught. Not being caught doesn't make the fraud legal.
Lol the lawsuit against TK was filed because he refused to resign. If the lawsuit was without substance, then Sunsan Fowler must have been a conspiracy and all the Greyballing evidence also faked like the moon landing.
The top “victims” of FTX were VC speculator funds. Perhaps if TK had realized losses for Benchmark and Google like SBF did, then TK would be facing additionally wire fraud.
If you don't want to be banned, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow the rules in the future. They're here: https://news.ycombinator.com/newsguidelines.html.
That had always been plan B.
Certainly there were other people involved, and hopefully they will receive their due as well, but to say he's just a "fall guy" is not at all accurate.
Murder I, Murder II, (voluntary/involuntary) Manslaughter, etc.
To the extent grey areas exist, they are accounted for in a gradient of crimes, each of which has a binary degree of guilt.
Fake numbers but say you shot and killed someone -- the law (and related sentences) can accomodate a wide variety of scenarios which will lead to a wide variety of punishments. E.g. if you were cleaning a gun and it went off, you could be charged with involuntary manslaughter and face 5 years, or if you were in a fight and pulled a gun you could be charged with voluntary manslaughter and face 10 years, or if the fight seemed avoidable it could be a 3rd degree homicide charge facing 15 years, or if you shot them will robbing a bank, it could be a 2nd degree homicide facing 20 years, or if you planned an assassination and shot someone, it could be 1st degree homicide where you would face life.
There's a binary "guilty / not guilty" but on the guilty branch, each of those sentences has enhancements that will determine your length of incarceration. Was this your first crime? Were you on drugs? Was the robbery over $5 or over $50k? and so on and so on.
Don McLean - American Pie melody
"The daayy the Bankman fried".
Prosecution agreed to not pursue any additional charges, except perhaps criminal tax violations.
[0] https://s3.documentcloud.org/documents/23495436/crypto-coope...
[1] https://www.washingtonpost.com/business/2022/12/21/caroline-...
That has nothing to do with her sentencing and is typical of any plea agreement. I’m not going to plead guilty to crimes without the guarantee that you’ll not charge me with more. What would be the point of pleading guilty then?
It's not going to happen. 0% chance.
If Sam has a pardon coming then he’s done as much as he possibly can to make it damaging to the pardoner. Can’t see it happening. Parents, maybe. They haven’t played this like asshats.
I would definitely take the $1000 bet, but I don't make bets with strangers who probably won't pay up.
You’re way off base.
The Spidey senses tell me there’s more to this we’re seeing.
Whether you believe Elon or not, FTX was greasing the DNC wheels with a lot. FTX also had a lot of celebrities on board. They had the Miami Heat arena with their name on it.
Now it’s all wrapped up, guilty as charged, and now what?
1. SBF's crimes hurt rich powerful people 2. Trump has a third of the voting population in a cult-like trance 3. Prosecuting political figures is a lot harder, especially presidents
Did you expect he'd never be charged? Did you expect he'd never be found guilty? I don't know where this kind of cynicism is coming from.
I'd be absolutely shocked if he's sentenced to less than 5 years. I expect him to actually get north of 15 years.
https://gizmodo.com/kevin-o-leary-bitcoin-ftx-ponzi-sam-bank...
For example, the Rikers Island jail is mostly for pre-trial detention. People don't get sentenced to Rikers.
[1] https://prisonprofessors.com/best-federal-prisons-to-serve-t...