I was reading the trial report by Inner City Press. The AUSAs were incredibly thorough and strategic. The evidences were air-tight, the cross-examination was masterfully controlled with precision and incisiveness, and of course the closing argument was forceful. It was a great joy to read the report, as if I was watching an extended episode of The Good Fight. On the other hand, the defense was really weak, quite hand-wavy, and resorted to arguing about not-so-irrelevant specifics like how hard SBF worked. The closing arguments of the defense can be summarized as SBF was not guilty because he spent all the customer money on investment, on political donation, on private plane, and on company-owned real estate properties. They were company expenditures to build a business, not for personal gains. Therefore, SBF did not have any intention of committing a crime.
The defense really had no option. Several of Bankman-Fried's previous defense teams quit on him due to his behavior. Even in this trial, during a session with just the judge, the defense made an objection to a question, the judge sustained it, but Bankman-Fried answered anyways. His own defense team asked him where had he been this entire trial because the objection was sustained, you didn't have to answer that. Bankman-Fried retorted that he felt like he had to answer that one. Just think of how crazy you need to be to frustrate the only lawyer who would take Ghislaine Maxwell's case.
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.
This says something of culture of hubris that is so easily elevated to leadership positions in America's tech culture. It's nice to see one of these fail-bros get taken down.
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.
Take an idiot that needs to feel important, tell him he's a "boy genius"
This points to something I've always wondered about SBF: why did anybody think he was a 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.
The crypto crowd needed a genius, and he kinda fit the image, so they went with it. It’s not that different to any other political movement; leaders are made by others, not themselves. It’s natural for us to focus on the person itself as if they are the ones getting all the benefits but all the crypto scammers benefitted from having an “altruistic crypto king” as a media figure.
I know a few MIT grads and they're plenty smart but nobody is calling them geniuses and throwing billions of VC at them, so I'm wondering what was different about SBF.
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.
Totally agree. The ferocity of hustling and always be selling on the one hand and dually the reflexive need to hyperbolically market or brand someone as exceptional category X with the implication the bestower also has brilliant insight is gotten stupid. When the currency becomes BS you can bet tomorrow can only bring hyper BS.
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.
I'm still reading the fawning biography Going Infinite, and even Michael Lewis thinks there was a lot of "right guy right place right time" involved. Heck, even SBF thought so. Lewis' origin story is that SBF noticed how efficient Jane Street was and how inefficient crypto markets were and assumed that somebody would inevitably bring greater efficiency to crypto, so he thought, "Hey, why can't that somebody be me!?"
Yeah even if one thinks negatively of Jobs, comparing SBF to young Jobs is a joke.
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 mean, even if we feel negatively about Jobs, we can also point to a pretty wide range of accomplishments he helmed. Even outside of Apple. He was one of the founders of Pixar, purchasing it from Lucasfilm. Also famous for a certain brand of charisma or at least persausiveness. One can not think very highly of him, but also see why investors would be like let's give this guy some money, perhaps lots of money.
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.
It’s also that he was naive enough to put himself out there as a kind of figurehead of sorts of the crypto movement. So the others were probably like “ok if you insist…”
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.
I meant 2020’s as a decade, and the concept is Effective Altruism, the idea that a bunch of geeks sitting in a gaming chair behind a computer screen know better what to do with charity money than the people actually doing it on the real world.
> In a few years she'll probably find herself making book deals and getting paid outrageous consulting fees
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.
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.
Crypto is explicitly tech, and a crypto exchange lies at the intersection of finance and tech. It has never been a requirement that leadership of these companies be engineers (much to the dismay of any engineer hired at some of these companies).
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.
What platform did FTX create? Were there apps you could install into FTX?
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.
This is why I think it's strange that Coinbase is considered a crypto company. It is/was a Ruby on Rails web app. Almost like calling the CME Group an agriculture company.
Tesla is a tech company, not a car manufacturer -> common reasoning for Tesla market cap
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.
Even without touching customer funds the FTT token thing seems quite wrong to me.
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.
Well yeah the FTT token thing was a bit iffy if not really a ponzi scheme. Exchange tokens go on - you can still get Binance token or Kucoin token if you like and they tend to work as a sort of equity benefiting from income from the exchange. But not exactly equity and kind of subject to manipulation and the like. Where FTX sinned was treating its FTT tokens as an asset on the balance sheet worth billions when they were not worth that.
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.
It's wild to think of what would have happened if Alameda had gotten out of crypto and instead put all the stolen customer money in an index fund. The CFTC complaint says they started misusing customer funds in 2019. Stocks have increased a lot since then. FTX would have been able to meet any customer request for withdrawal, Alameda would have presented staggeringly large returns (trading profit / legally invested money), and SBF would still live like a king.
I'm somewhat out of the loop on this whole story -- can you explain how the IPO would have helped? What was his exit plan? My understanding of Ponzi schemes is that they always collapse eventually because everyone will want their money back sooner or later.
big infusion of cash from the IPO might have been able to cover up the deficits, and the inevitable "cleaning things up to do the IPO" work could have bought them time to un-fuck a lot of the riskiest accounts.
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.
It is extremely difficult to represent someone who thinks they did nothing wrong. I have a semi- high-profile case where the client honestly thinks he did nothing wrong. I tell him that doesn't matter; they can prove you did. You've provided nothing to make them question their judgment. Still he persists, "but I did nothing wrong." I've been sending him excerpts from the SBF prosecution to get him to wake up, but no luck.
I sympathize with you, When a person's moral compass gets so off, for whatever reason, it's kind of heart breaking. I once worked with a guy who decided to start taking testosterone because he didn't have the energy he once had. We were the same age and I told him it was part of the normal process of aging. I also told him T was a fad in most cases and cautioned him not to use it, even if it was under a doctor's care.
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.
Testosterone doesn’t cause rage issues directly, that is usually caused by excessive estrogen, which can also itself cause fatigue. It sounds like he just needed to lower his dose or take a drug to block conversion to estrogen. It seems like his doctor didn’t know what they were doing, or that he was actually doing illegal steroids at home and not physician prescribed TRT?
What does testosterone have to do with a moral compass?
This seems quite a weird take, are you an MD? Supplemental T in the normal range shouldn't make someone start hulking out to the point where it cost them their job and marriage, that would be extremely unusual, no?
No, I'm not an MD, I'm just relating what actually happened. When he got off the T, he admitted that it did have a negative affect, but still felt it wasn't his fault. But then again, at work nothing ever was.
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]
It’s not a myth, it absolutely does increase your anger and your drive. It also massively increases libido.
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.
I wouldn't go so far to say roid rage is a myth, 600mg is not an outrageous amount, the hardcore bodybuilders and some athletes will do much more then that. It's certainly possible that 3x that dose induces unnatural rage.
> When a person's moral compass gets so off, for whatever reason, it's kind of heart breaking
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.
I imagine it’s mutually beneficial to keep quiet. Lawyers don’t want to be known as “the company that keeps firing clients”, clients don’t want it known how many lawyers have fired them.
SBF pulled an Alex Jones. A losing case, answering questions for which objections were sustained, thinking he can talk his way out of everything, going through counsel like candy while ignoring their recommendations...truly, a match made in hell.
An odd question, but: why is he like this? Even from the start, before the criminal charges, his press tour was so bizarre. Is he just a delusional narcissist who thinks he can talk his way out of anything no matter what?
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.
Work for enough SF startups and you would meet a ton of SBF clones. I wasn't surprised by any of his actions at all. I don't know what it is, but there are so many SBFs in the startup world who think they know everything and don't think there are any consequences for their actions.
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.
He was raised at Stanford by two Stanford professors and surrounded by blowhards that subscribe to the insane concept of “effective altruism”. It’s really no surprise he ended up this way.
I feel effective altruism is just another word for "make as much money as possible but call it something else to make us feel better" for various so-called elites or wannabe so-called elites.
Effective altruism (like most -isms) has sincere adherents but also tends to attract oddballs who make it look bad. Here's a great post from a well known EA who explains why he donated his kidney to a stranger:
https://www.astralcodexten.com/p/my-left-kidney
He explained it himself in one of interviews. He mentally went from “helping mow” (like fighting diseases and making sure everyone has water and food) to “helping with future”. That is making sure AI will not end humanity.
Actions speak louder than words and history shows us that the movement exists for people who hoard obscene wealth to justify their hoarding retroactively while playing cowboy on a tropical island.
It seems to me that this is flatly untrue; most "effective altruists"[1] are not obscenely wealthy, the founders of the movement are not obscenely wealthy, and I'm not sure I know of any examples of what you say "the movement exists for" other than Sham Bank-Fraud himself.
[1] There isn't really a clear definition of the term. I mean something like "people who call themselves effective altruists".
Well, then it wouldn't be easily demonstrably false, but it would still be crying out for some actual evidence which doesn't seem obviously forthcoming.
"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?
You could say that about a lot of followers of belief systems. If someone 'ardently' believes effective altruism & they are confident they will one day save the world; wouldn't committing crimes once in a while be worth the long term result of the world being saved?
Effective altruism is just a way for sociopaths to mask their actions while they burn down the world.
I listened to wondery’s multi part podcast “spellcaster” about sbf.
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.
If you surround yourself with yes-men/women, you will eventually believe them. Most normal humans literally cannot afford to do that because you can't buy groceries with ego, but if you disconnect yourself from normal life by being one of the privileged few born with a silver spoon in their mouth and connections before leaving the womb, you can avoid reality for a long time.
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
While Michael Lewis never says it outright, the picture painted in his book Going Infinite suggests that SBF has a few things going on. Self-delusion and rationalization, ego, etc., but he also might be on one or more neurodivergent spectra.
He displays many of the tendencies of a narcissist or sociopath: never wrong, what benefits me is what matters, I'm the smartest one in the room, willing to flout societal norms, frequently lying or shading the truth to benefit themselves. All of this was testified to in court by the people who worked with him.
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.
He had so much working capital to play with, and he could have gotten huge amounts of more money to invest based on his crypto genius reputation, he could have probably gotten 100 million to make more of those random investments and hoped one would hit. Meanwhile, he could have paid himself a few million dollar salary. I read somehow a few of his random investments did succeed in having much larger value, maybe it was anthropic. Instead he'll be a prisoner for a long time.
His parents are charged too, will they end up in prison?
I'm going to go out on a limb here and say that the AUSA's performance here was not particularly impressive. Yes, they constructed an airtight case, but to do that, they handed out immunity deals like candy to all of SBF's co-conspirators. Sure, they got their guy, but it almost looks like they wanted to craft a narrative that puts all of the blame on him. Because of that, several other huge fraudsters here (eg Caroline Ellison) get to walk. The US attorneys seem to have set up SBF to be the fall guy, while being far too soft on everyone who conspired with him.
> several other huge fraudsters here (eg Caroline Ellison) get to walk
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.
"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."
All the concrete examples in that article are of cooperating witnesses who “only” got five years when they were facing life. Gary wang might not get any time but Caroline Ellison pled to charges carrying 110 years. Leniency for her means 3-5 years incarcerated.
You mean the one concrete example of the mob boss who got 5 years for 19 murders because he cooperated, right? In your mind, are 19 murders equivalent to 7 counts of fraud?
Do you realize that those 19 murders likely carried 19 consecutive life sentences as a maximum sentence?
That's not how sentencing guidelines work. The judge won't look at what was handed out to a murderer to decide how to handle a fraud case. They'll look at fraud cases to decide that.
The parent commenter had decided that "life for 19 murders = 110 years for fraud," so she would get 3-5 years. I agree with you that they are not analogous.
However, all of the expert opinion I have seen on this suggests that there will be no jail time.
Well, you see, when presidents come out of office, a bunch of things start happening which the general public is pretty ignorant of:
- 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.
> In your mind, are 19 murders equivalent to 7 counts of fraud?
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?
That "good" reason sounds pretty sexist to me, when she was also a Stanford-educated Jane Streeter before their polycule ran off to do the kimchi arbitrage and later found FTX.
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.
* 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.
There was potentially a lot of profit as Bitcoin traded for 10-20% more in S Korea and the liquidity in the market was in the billions. The tricky bit would be once you've sold your Bitcoins for Korean Won, how easy would it have been to change the Won back to USD given S Korea had capital controls at the time. I'm not sure how many you could get away with changing by going there as a tourist. Probably a limited amount. Not sure if anyone knows how much?
My understanding of this trade is that you can trade unlimited amounts of Won for USD as a person outside of Korea (beyond the jurisdiction of the Korean government), and as a non-Korean you can bring out an unlimited number of Won as long as you don't carry it as cash. However, this is all a set of "loopholes" that aren't exactly illegal but aren't explicitly legal, which is why no reputable bank or trading firm could do this trade.
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.
Right! Justice dept doesn’t handout plea deals where you don’t plead guilty to the most serious of the crime - even when you’re a cooperator. The sentencing might be lighter for cooperation.
>The US attorneys seem to have set up SBF to be the fall guy
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.
The fall guy is usually someone high up in an organization where the entire organization does something bad. In 2008, chief risk officers, CEOs, and COOs were the fall guys over the failures of their respective banks.
The fall guy is someone who "takes the fall" (ie the responsibility) for the misdeeds of someone else. You're not the fall guy if you're convicted of something when you're the person who did the thing.
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.
> 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.
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.
FTX functioned as a vault for user funds as an exchange, while Alameda, sharing common ground with FTX, was granted the privilege to borrow these user funds. Already off to a bad start because of the conflict of interest.
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.
But that's exactly my problem--there are countless examples of banking crises the result of colossally irresponsible and negligent financial and economic decisions. Yet the government bails those out and does not call those fraud.
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.
The situation with Alameda resembles the Enron scandal more closely than a banking crisis like that of 2008.
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.
Things going badly for investors is not in and of itself fraud even if it causes a crisis. That's why the hedge fund Alameda losing investors money is not by itself a fraud. FTX taking customer money and spending it is however fraud. That's just like if you put money in a bank and they just spend it that's fraud.
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.
The best one I saw today (can't remember the source): Suppose you gave your broker money to invest for you, and she bought herself a really nice house instead. That's basically it.
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).
> chief risk officers, CEOs, and COOs were the fall guys over the failures of their respective banks
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.
They handed Elison a plea deal waving all charges except criminal tax violations, which she's unlikely to be found guilty of.
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.
> They handed Elison a plea deal waving all charges except criminal tax violations
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.
Agreed -- I believe the confusion comes from this sentence in the document:
"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]."
It's not false, it's my conjecture. Ellison just spent a total of 14 hours testifying against SBF and, according to court reporters present, denying her own responsibility for planning the fraud and saying she was simply directed to perform various criminal actions she was not aware the full implications of. It's nonsensical to believe she accepted responsibility for anything more in her plea deal, which will be the sole basis of her sentence.
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.
No, it's just false. She pleaded guilty to 7 charges already. We don't know what she'll be sentenced to for those crimes. That's a completely separate issue. She's already pleaded guilty. The source is the Justice Department.
"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. "
> They handed Elison a plea deal waving all charges except criminal tax violations, which she's unlikely to be found guilty of.
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.
They seem to be confusing an agreement not to seek further FTX-related charges except potential tax fraud charges with waiving the existing charges which she instead actually pled guilty to.
Yeah... but otoh, being a lower level peon shouldn't be a get out of jail free card. The incentive is then 'well as long as i flip on the big guy if he gets caught, i can make some nice piles of money in the mean time and maybe i can exit before it blows up anyway'
she wasn't a lower level peon, she had actual rank, and enough education and experience to know what's going on.
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.
>but her career is busted -- no one is ever going to trust her after this
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.
> Yeah... but otoh, being a lower level peon shouldn't be a get out of jail free card.
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.
> being a lower level peon shouldn't be a get out of jail free card
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).
That would absolutely remove the incentive for anyone to cooperate with the government ever again.
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.
Carolin pleads guilty on multiple counts of charges, and per her words on the witness stand, her corporation with the AUSA would get her a letter to the judge from the AUSA that acknowledges her corporation.
I realize that incel is a fun slam but I think its only accurate when self-prescribed. Otherwise the “involuntary” aspect isnt fulfilled. The “voluntariness” of celibacy cant be determined by someone else.
who is the incel here, exactly? are you just using that term as a way of saying "shady" or "irresponsible"?
like, everyone at FTX was banging each other constantly. And I can't see how the celibacies or lack thereof of the judges and lawyers is a discussion topic.
at this point it's hard to tell if this is shillbot trying to derail a convo, or just abusing words that have become too common to the point of losing meaning.
Incel is nowadays an ideology, not the act of being involuntarily celibate. If you think that sucks, go take it up with the incel forums where they discuss how it's totally women's fault that they can't get laid.
Inceldom is not about the struggle or loneliness, but about directing that into hate for women as a category.
Hmm I disagree. Commit fraud => go to jail. Commit fraud as much as Caroline? Direct to jail.
I don't think that makes someone an incel and it's unnecessary to attack people for hating women because they clearly have not expressed anything of the sort.
And the AUSA rightly made crypto a non-issue. This is not about crypto but simple fraud. As a result, people who are not familiar with crypto can still easily understand the trial.
To be fair SBF convicted himself on a platter. Only he knows what made him think he'd get away by facing trial. Maybe he was just dumb, overconfident, ill-advised, or a combination of everything.
He is one of those people who think they can talk their way out of everything. Everything is not only negotiable, but the only possible "truth" is what they are saying right now (yesterday's "truth"? "You're remembering that incorrectly - I never said that!"). I hated working for people like that, and I'd feel like I needed to take a shower after every meeting. If you only encounter them occasionally, a normal person would just think "wow, they're really charismatic". Daily, repeated contacts with them crawl under your skin. I'm grateful that the word "gaslighting" has entered common vocabulary as I didn't have words to describe them (back then).
Gaslighting is a such a great phrase. It's a very specific kind of cognitive dissonance that is so common in the workplace. I find the worst gaslighters are "leaders" who surreptitiously change their stance on something without communicating why. Over time everyone under them just loses the motivation to do more than the bare minimum because they don't know if the goal will match the leader's requests.
I'm reminded of Neal Stephenson's description of Rhetors and Incantors in 'Anathem' - "Rhetors could change the past and were eager to do so, Incantors could change the future and were very cautious using that ability". Could be a parable about leadership styles.
It's not really a "thing people do", more "how their ChatGPT works". Holding consistent state over a long time period is pretty advanced brain stuff. E.g. mice and even monkeys don't need that capability much. We delude ourselves into believing that human brains have filesystem-level persistence, but really they don't. SBF is just a bit more sigma from the mean.
A 100 yr and a 70 yr jail sentence are basically the same thing. My guess is they knew they could win at trial pretty easily so they just didn’t offer him much of a deal, and from his perspective it was all or nothing so he might as well give trial a shot.
Why would they have offered him ANY deal? (Do we know they did?) All the co-conspirators agreed to testify, and it was a slam dunk case. He could have plead guilty of his own conscience, of course, but no reason for the prosecution to offer any incentives in this case.
It actually seems that they did not. The only reason would be to spare the expense of a trial, which isn’t much in the grand scheme of things in this particular instance. They can probably extract money from him in fines, presumably he has some left somewhere.
> They were company expenditures to build a business, not for personal gains
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.
It isn't a legal defense for the charges he's facing. He can't take money out of a customer's brokerage account and spend it on anything, and there is no political donation that could make that legal.
Take two or three steps back, and reason like this (if you’re SBF’s defenders, that is): the evil Democrats have made SBF do their dirty political doings for them because, well, they’re evil -> try and turn this whole case into a political thing (see the evil Democrats from before, also see Dreyfus from 100 years ago) -> try to turn SBF into a political cause celebre, again, like Dreyfus 100 years back -> 2024 comes and there are chances that those hating the evil Democrats I had mentioned are in the White House -> with SBF a political cause celebre put in prison by those Democrats there would be by then very big chances for a presidential pardon, because by then this would have transformed into a political issue, not a simple “some guy stole a lot of money”.
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.
Again, just look at Dreyfus 100 years ago, just pour lots and lots of money and make do of the connections in the media and thereabouts to make this into a political case. Not let him turn into a Madoff, because if that happens he'll end up like Madoff. And it doesn't need to be full bipartisan support, Dreyfus wasn't a bipartisan support (to the contrary, it politically split France in two).
> 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).
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.
"Your honor, I never intended to commit a crime, I simply intended to start with mere childish mistakes and then exponentially escalate their damage and viciousness throughout my entire life without any repercussions. Is that so wrong?"
In under five hours! The jury was home in time for dinner.
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.
Because there's essentially a whole second sentencing trial. After the verdict, the Parole Office prepares a Presentence Report (I'm not sure if these are public? I'm always looking for them and never finding them on PACER†), the "PSR", which is like the opening bid for the recommended offense levels and grouping. The prosecution and defense then respond to the PSR with exculpatory, mitigating, or aggravating claims, victim impact testimony, your scout leader when you made Eagle Scout, all that stuff. Only then does the judge work out what the actual sentence is.
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.
A guy named Lev Dermen just got 40 years with a guidelines score of 47 (the table doesn't even go that high). He was charged with defrauding the government out of half a billion dollars in biodiesel tax credits, went to trial and kind of like SBF all the other conspirators testified against him. That case also had destruction of evidence, witness intimidation, and at the time of sentencing the government was still trying to recover a Bugatti and a bunch of money in Turkey from him.
But the number of victims and the hardship element probably means he's looking at life.
* +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 was hunting around for an easy way to do this kind of math, and found https://www.sentencing.us/ . I haven't done an amazingly deep validation, but the math lines up with the above, and thankfully SBF has done a pretty good job stress testing the various clauses, so I'm going to be bookmarking it for the future.
Once you get to a 43 offense level, the guidelines sentence (its not really a range at that point), irrespective of criminal history category (guidelines sentence ranges are a result of a table cross-referencing offense level and criminal history category) is straight life.
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.
Yeah! It just didn't seem at the time like it was true, like maybe they linearly projected out the dollars or something. But no, from the guidelines doc, it looks very grim indeed for SBF.
It also makes the time gap between now and sentencing feel a bit performative. It doesn't make a ton of difference either way since he's managed to land himself in custody with the witness tampering antics, but it does mean that there's not much point in his lawyers quibbling over things like "how does the bankruptcy fit in" and "does blowing up your own company count as destroying a financial insitution, or is that intended for when you topple the victim of your crime", because even if we nix both those modifiers it just shifts him from "life plus cancer" to "life".
I'm a little confused by this, 47 is higher than 43, and 40 years is less than life... it also looks like Lev maxed the dollar loss or came really close, so how come you're sure SBF gets life while this Lev guy got a higher score and only got 40 years?
That's not so much going to be an issue in this case. But a lot of the time, especially in federal white collar cases, the defendant isn't in custody during sentencing anyways.
I believe so, because he was an idiot during the trial and violated his home confinement conditions.
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.
Yes. He was out on bail, but that was revoked for witness tampering ahead of the trial.
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.
Having been called upon to serve on a jury before, I will admit that I tend to err on the side of the accused, but here the guy did everything, often in his own words, to tank any reasonable defense and doubt one could have. I followed the case and shook with disbelief at some of the things that were said. I was amazed at the initially lenient treatment he got. My jaw landed on the floor when I saw python code that did not even try to hide randomized balance. And those are just the highlights off the top of my head.
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.
Allegedly. There’s no evidence to back this claim other than the guards were on break when he died. If I were to plan my demise in jail, I’d wait for the guards to go on break as well. Less chance of them finding you before you’re gone.
His client list is quite well known. So far as I know, and in spite of the evidence, no one on it has ever been questioned - apart from Prince Andrew, and that was the result of a civil case.
With Epstein dead there's no reason why anyone would be. Any former "party friends" can always be paid off, or discouraged in less subtle ways.
The more interesting question is - who replaced Epstein?
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.
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"
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.
“So, contrary to popular belief, the internet is not some big truck that you can just dump something on a la Ted Stevens; it’s more of a … series of tubes?”
There’s quite a bit that goes into sentencing hearings especially if there are a lot of victims and/or the defendant has a lot of money. All that takes time to line up.
There's no realistic grounds for appeal, probably not even in a country with a more lenient system for appealing criminal convictions. In America, forget it.
I think parent has a point - I'd love to know if he can potentially buy more time out of jail by forcing an appeal, then requesting bail in the interim, even if it is expected to lose the appeal or is downright dismissed.
It sounds like its plausible, but i'd like to know for a fact
I think what TillE was talking about wasn't the likelihood of a successful appeal, but whether or not he'll stay in prison until the appeal is completed.
I wonder how posting bond works post-conviction (pre-appeal). As in sourcing of funds, as now you're in a limbo of reasonable doubt about how you made your money (and in this case, his parents also shared in the largesse).
They'll also figure in how likely they think he is to skip out and flee the country or something. He very likely has the money to do it stashed away somewhere, so the question is would he be willing to?
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).
That's hilarious considering neither Mexico nor US checks passports when you walk into Mexico in CA/az west except maybe San Ysidro crossing. She literally could have walked across and nobody would know, instead she did the dumbest thing possible of buying a one way last minute air ticket on a flagged passport. That would have triggered some cursory check for anybody let alone Holmes.
We were done in 30 minutes for a DUI case in local county court the last time I served. 25 of those minutes were spent trying to find any reasonable doubt after we all agreed on guilt.
Is the lunch nice? Do you get paid as well? What kind of hotels are you all kept in? Is it like in those Hollywood films? How common are things like jury tempering? Do you all have sufficient protection?
I served on a jury fairly recently, and it was a much more mundane thing than anything you'd see in a Hollywood film. Whole thing took 10 hours start to finish. Got picked from the pool, had the case presented by the prosecutor, heard witness testimony, the defense attorney made his case mostly by questioning the prosecution's witnesses, closing statements, deliberated very briefly (it was not a complex case) and delivered the verdict and went home. We were paid about $40 for the day plus travel mileage, and lunch was ordered off a menu and delivered to our deliberation room, presumably from the courthouse cafeteria. The food was actually pretty good.
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.
You were in the jury pool for a week. You could serve on multiple cases if they were short enough. If you were picked for a case and it went on over a week you got paid. Some trials require a hotel stay but the chances of getting on one is rare.
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.
Oh yeah, I watched an episode or two of that. Of course, it's not actual jury duty — it's all fake. I assumed that food was provided because that keeps them all together, for filming purposes. When I served, people split up at lunchtime and went to various different restaurants.
Yea I think it depends on which county you're in and the case as well. These guys had their hotels paid for by the end of it because they had to be sequestered.
> Kind of scary that this is the rigor our justice system hinges on.
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.
Yeah I remember one of Sam's lawyers insisted he stay in the Bahamas and fight extradition if he was to have any chance of staying out of jail and the other lawyer said he should do the opposite and accept extradition.
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.
He also did a media tour after things blew up instead of just shutting up, which from what I gathered isn't the best idea for staying out of jail. Real overconfidence in his charisma?
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.
Extradition treaties aren’t the only thing to watch out for. Plenty of countries without them will happily fall over and hand someone wanted over.
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.
Why would they need go to a country subject to treaties. Unrecognized territories like transnistria (weev!),rojava,Somaliland,Ambazonia, western Sahara, Palestine (before invasion), fractions of Myanmar, idlib, rebel held congo fractions, etc. Basically no diplomatic relations and they will likely not eject someone seen locally as supporting their cause.
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.
He doesn't speak the language, had a highly recognizable face and is perceived to have money. Sounds like a recipe for a bad time in the rougher places of the world.
Not sure I'd want to live in Ambazonia but they speak English and would likely not have many that recognize his face. It also would have been easily accessible by yacht transatlantic from the Bahamas into a difficult to patrol estuary. But this is all pure fantasy, I understand why he didn't do that.
In any unrecognized territory, you risk becoming a pawn in exchange for a prisoner release. And pray that the unrecognized territory continues to exist as is.
There's no riskless path remaining after you've defrauded billions of dollars. Iirc the white girl who bombed the subway in london is thought to be still hiding in such a territory like two decades later.
The right place to go in this case is probably the sort of place that will take your money and not extradite you. I heard the United Arab Emirates helps. Maybe Hong-Kong?
In most cases this is true, Israel rarely extradites jews and generally the US doesn't try too hard in forcing exceptions (like tying aid to extradition of accused), but this was way too high profile, and SBFs politics in general don't align with Israel's, so I could see Israel not working out for him.
For anyone curious, Ken White has a good and entertaining article breaking down maximum sentences in print (here, 110 years) and what people actually serve. It's worth a read:
"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?"
The opposite thing is going to happen in this case, and I'm sure you'll hear Ken on Serious Trouble saying the same thing next week (you can get Andrew McCarthy, another former AUSA, saying the same thing in the National Review today if you want that with a dash of anti-woke conservative racial politics). In basic economic crimes, sentences scale primarily with dollar losses, and FTX lost billions. He's going to do something resembling the statutory max, and then only if statutory limits take life off the table.
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.
Elizabth Holmes committed fraud, endangered lives, and harassed whistle blowers (one spent over $400,000 in legal fees fighting with Theranos). She only got 11 years and 3 months. I would not be surprised if Sam Bankman-Fried also got a fairly short sentence.
Holmes was only found guilty on 4 of 11 charges, totalling around $300m raised from investors. SBF is guilty on all counts of stealing 26 times more than that - $8bn of his customers deposits.
The loss amount calculated for Holmes was $120m; $381 million was the total investment amount, but not all of that valuation was due to fraud.
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.
It's worth noting that the mechanism is still different. In this case, "the upper end of the range when you math out the sentencing guidelines" and "the amount you get if you take all the base charges and add them up and assume they're sequential" start to blend together because of the sheer scale.
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.
> the upper end of the range when you math out the sentencing guidelines" and "the amount you get if you take all the base charges and add them up and assume they're sequential" start to blend together because of the sheer scale.
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.
Another thing that makes this case difficult is that SBF kind of breaks the sentencing guidelines. He starts at the highest possible base offense level for fraud, so he's in a position where every point haggled over is worth years of sentence time. And this also means statutory maximum sentences come into effect, and I personally don't know how that interacts when you've got multiple charges.
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.
> And this also means statutory maximum sentences come into effect, and I personally don't know how that interacts when you've got multiple charges.
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.
In some ways I can understand white collar criminals being "more evil" than murderers. As I understand it, murderers are often acting out of desperation, poverty, etc. On the other hand, it seems like a lot of white collar criminals who have everything but feel entitled to take from people who already have less than them. Although clearly the murderers did the more heinous crime.
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.
White collar criminals can also ruin multiple lives. Victims of such fraud have even been driven to suicide before. In those cases, at least, I find it hard to say it isn't roughly approximate to murder.
I like to think that I want to know what SBF's circle of friends and family had to think about this fraud, as it was going on, but I'm probably better off not knowing.
Yeah, I’ve heard that a bunch - about the press being uninformed or lazy. I’d offer that they are neither, but if they are restricting themselves to reporting facts and not prognostications and opinions, the statutory maximum is a reasonable thing to report.
I think this is likely the case. It's the only number they could have that doesn't involve a judgement call. Also, usually when I see things like that reported, they mention that most people don't get the maximum.
If I have to read a news article as if its some weasel-worded lawyerspeak contract (between the lines), then they're no longer in the business of informing at all.
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".
But in some cases, especially novel cases where they want to set an example, they can/will actually throw the book at you.
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.
I'm studying for my CFE (Certified Fraud Examiner) and can shed some light on this.
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.
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.
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
Most of them only have 'wild and inexplicable success' on some internal metric, they generally don't claim to have magically found a way to make billions of dollars on 'arbing btc in Tokyo'.
To be fair, there are business models where GAAP doesn't give the full picture. I am currently running an online poker business and GAAP is quite inadequate there
I think a big one is if nobody can explain you where the money is supposed to come from. If it is all hand-wavy and nobody can explain what that company is doing get out. In the best case it was legal, but they are incompetent morons.
Worldcom acquired the company I worked for. I saw their culture featured all manner of players, hustlers, empire builders, untouchable princes, etc. battling for turf. Lords and serfs. The stock was supposed to always go up. "Genius" businessmen somehow figured out how to print money where others had not. The company had a mutual fund that only held Worldcom stock in the 401(k) retirement plan. That was a huge red flag for me and it resulted in many of my colleagues losing their retirement savings. I was far from the levers of power but I had a really bad feeling about the leadership and left before the crash. Since then I have always instantly liquidated all options and stock grants and put them in safer investments. That can be a hard decision to make when you see many people getting rich (perhaps temporarily, perhaps not) betting on the equity to keep improving. But I kept expenses low, saved a lot, and still retired at 49 so I'm happy with how it turned out even if I passed on some big gains.
I think the hard part of this for naive young people is that you have to actually do some investigation. This should be front-and-center during your interview process. When they get around to asking if you have any questions for them, you should take that opportunity to see if this is a serious place.
1. When you cannot explain how, mechanically the business works
2. Management is elusive, opaque
3. Employees are lax about controls, compliance, even morality
If your gut says they might be criminals, they are probably criminals.
Far reaching stories of how money is made and the numbers don't actually make any sense. Or it is all financialization. Also unrealistic profits. Without known number of paying customers and known spending.
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
Lots of comments below criticising this post for "regretting not being a fraud" or some such. Be charitable... the sentence parses just fine as "I regret having worked in crypto".
> Reminds me of working for MCI-Worldcom. When you think you’re working for crooks, you probably are. Run away.
>> 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.
That is a weak justification, commonly used by criminals. A liar might say, 'everyone lies'; honest people don't say it. Unless we are engaging in a very philsophical discussion (possible on HN), we don't need to explain the problem in detail.
It's not a "justification" of anything, just a question for someone who blames other people industry as fraud. Just curious about way of thinking, nothing else.
And everyone lies indeed, those who deny it are either delusional or liars. It's human nature.
I didn’t blame an industry as fraud. GP was describing a specific fraud that occurred in an industry. Not the same. I’m sure there are legitimate crypto businesses.
Profiting by deception is why marketing even exists tbh. Nobody's plastering ads that outline products in factual unbiased way, it's all just a hair above what the law defines as actual fraud. Except one every so often that deliberately breaks the convention and is often even more likely to be deceptive by fooling people into thinking it's honest.
Worldcom had a business model that was ahead of its time. Show growth, raise stock price, use stock to buy companies, grow, rinse and repeat.
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.
Worldcom was a fraud. I believe they were caught inflating their earnings (i.e. saying they made more money than they really did). This was not a business model “ahead of its time”. It’s a crime.
Sequoia invested $200M in this guy. Has anyone looked at whether SBF could've done as much damage without that investment? Has anyone looked at if Sequoia did their due diligence? Seems like Sequoia could've seen red flags just from knowing Alameda existed. The potential abuse there was completely obvious.
The whole Sequoia thing is so interesting. Here is an excerpt from their (now taken down) profile of SBF, highlighting the moment he convinced them to invest:
> 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?
I think the practical business/technical goals are almost irrelevant. It's not that SBF had a brilliant business model in mind. It's that he fit the "look" of a founder that those VCs expected. He was one of them, with the right pedigree and right connections. It's affinity fraud [1].
To be fair, FTX had decent traction and Alameda had been successful in the past. I think it's easy to say "pass" on SBF now that we know he's a crook, but there are genuine legitimate exchanges out there that are worth plenty. Coinbase, in the middle of a bear, has a market cap of $20B (it was valued at more than $80B in early 2021).
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.
>To be fair, FTX had decent traction and Alameda had been successful in the past.
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".
Early Alameda strategy was BTC arbitrage in Asian markets (which is very above-board). They were definitely successful. Once that well dried up (arbitrage is usually an "early bird gets the worm" game), they started gambling on shitcoins, which is where the troubles began.
The BTC arbitrage in Asian markets was absolutely NOT very above board. He lied to get Japanese bank accounts opened and to keep them open. Transferring the BTC into Korea was against the law there. He just figured out how to do it for quite a while without getting caught.
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".
They were definitely not successful. Anyone looking at BTC prices between NA and Korea saw the arbitrage opportunity. The fact that it sat there so obviously for so long was a testament to how impossible it was to profit from it. In fact, the whole reason for the pivot to an exchange from a pure arbitrage play was due to their lack of success.
No. That is incorrect. A brokerage / exchange may not use customer assets for their own benefit. They are not a bank -- they are custodians. If they are doing that, they are committing a crime.
I believe Binance was bigger than FTX. That being said, it’s hard to tell how big any of these organizations really are because they do not release audited financial statements.
If you look at recent Nobel Prize winners in sciences, many are not weirdos, just smart and without relying on nonsensical gimmicks. Jennifer Doudna, Emmanuelle Charpentier, others, all examples of just smart and persistent and focused.
Unfortunately the people in power do not care for revolutionary change. They want change that makes them money, not change that fundamentally restructures society.
Change that fundamentally restructures society does not need permission from anyone. When the tech is here it will speak for itself, in spite of any of the major resource allocators being blind to those who bring it -- because a part of that change is those resource allocators being made irrelevant. They have held back the human race with their ego, blindness, and total lack of vision.
They will spend $200m+ on a clown like this but ignore countless people with real innovations.
You gotta remember, what's being sold in this kind of pitch is not a business model. They're looking for unicorns. What's being sold is the maximum possible size of the market you can extract value from.
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 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.
FTX didn't have a CFO. They didn't have a legitimate board of directors.
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.
This, to me, is just a myth that is pushed by investors that don't know what they are doing, and media outlets who want to talk about spicy people. There's no strategic reason to put your eggs in the basket of crazy people. We only hear about the crazy people because they are newsworthy.
I don't know. To the extent that Musk had a plan at all with his $44B Twitter purchase, a big part of his idea seems to be that he wants X to be the next banking app/Venmo.
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.
> How was this compelling to people who control serious money?
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.
Anybody remember that rich dude who built a submarine against every single convention and over the screaming shouting objections of literally every other person alive who's built submarines, who then tried to go to the Titanic and killed himself and four other people?
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 suspect the sole purpose of ideas like wealth tax is to point out undiscerning left leaning voters.
You know, the people whose mental model of "the rich" comes from scrooge mcduck - wealth being mostly stored in gold coins that are easy to dive into and/or tax on annual basis.
This whole exchange made me think that there must have been a family or friend connection back to Sequoia.
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.
Sequoia likely made plenty of money by underwriting their in-house e-coin FTT, hyping up SBF across the media, and then dumping FTT on retail investors afterwards.
No proof, because absolutely nothing was audited. That's the whole point of crypto, avoiding securities regulations.
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.
This just goes to show all the critiques of this kind of investing were very true. FTX and Theranos are examples of how this can all go very wrong.
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.
What else should investors do in the time of ZIRP? This looked like a potentially crazy return, right? That's point of investing like this, right? Pour money into a "winner" and ride the crypto-future-promise-delusion-wave...
It's pretty wild how unhinged they became about pretty much rambling...
> 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?
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.
Wow wow wow. He's talking about inserting a business in the normal person's payment path. It's certainly ambitious and could be profitable if you could get on that trajectory. The question would be whether there is a credible path from crypto futures exchange to that, technical, financial or marketing-wise - but that's a different question.
Yeah but back in the Bitcoin crazy time it wasn't that unrealistic for "serious money". Mastercard, Visa and AmEx move trillions of dollars a year, capturing even a slice of that marketshare means being in possession of a money printer, which explains the (often absurd) investments into anything crypto.
I think that idea in particular is quite good actually ^_^
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.
> 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.
I think it's a good reminder that large investors are human and don't possess any special knowledge or magical foresight. Consequently, everything they say about the future of technology and society should be taken with a large grain of salt - not treated like god's honest truth.
As I mentioned in another comment, I think it's not accidental that SBF was pumped full of delusions of being a boy genius.
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.
This does not sound plausible because the investors will almost certainly not get anything out of the bankruptcy. Also there is no evidence any investor secretly profited from FTX and it is hard to believe any VC put millions in and some how got them out. They put money in and FTX lost it.
Baffling. When I hear SBF speak and I analyze his system all I can see is a thoroughly medicore JAG hyping up a bad product that was a spit-and-a-prayer. And yet he was raking it in...I can still remember investors and the general public being appalled at facebook being valued at 11 billion in 2008, after they'd destroyed their competition and taken over "social networking". Something changed in the collective consciousness.
Silicon valley investors always jump on hype, just remember the dot-com bubble and yea crypto was and still is very hypey although AI, LLMs and generative AI are now taking over the hype. To the next hype train we go.
It was fast because the US Government did a fantastic job of prosecuting him, and his defense team had an awful client. Basically, it was obvious he was guilty, and there was almost no chance his lawyers could show there was a reasonable doubt that he had not committed the crimes he was accused of.
Also because he broke the terms of his pretrial release, and so was forced to await the trial in jail. That made the idea of delaying the start of the trial for as long as possible less appealing.
Yeah the defense had no alternative story to offer. Before the trial they sort of hinted that Caroline Ellison was responsible for all the fraud, but they never really made that case in court, presumably because the facts didn't exist.
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.
Appealing a criminal conviction is quite hard. It's certainly his right to file an appeal, but he's likely going to be detained for the duration of the appeals, and the likelihood of being successful seems pretty low to me.
I wouldn't agree that it is necessarily hard -- I've done dozens of appeals -- but often with trials there is not a lot of meat left on the bone; most appeals I see are trying to make mountains out of molehills.
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.
> but often with trials there is not a lot of meat left on the bone;
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.
Agree. And federal courts are way better at this than state courts. Federals are more academic. State courts the judges are just running buck wild doing whatever the hell they feel and never looking in a law book in their lives.
Tech touches everything. So does law. Tech cos need lawyers. Lawyers need to understand and/or use technology. Or it's entertainment. Any reason is as good as the next.
Why wouldn't they? There are probably loads of people here who don't work in tech whatsoever. (e.g. myself: a holder of degrees in English and classical piano; a student and part-time shop assistant. Programming/tech/science related interests are only a hobby.)
Not a lawyer, never passed the bar. I just litigate on my own behalf against the government when they don't follow their own laws, and spend a decade here or there in jail where there is lots of legal work to read...
He can only appeal on grounds that were raised during trial. Did his lawyers even object to anything? Did they try to prevent the admission of key evidence? Did they raise any points of constitutional law?
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".
Appeals are expensive and risky. He may appeal but I doubt he has the money to. Also, he probably has no grounds for appeal because he really did commit fraud, the government has a lot of evidence that he is a criminal, and the government did not violate his rights.
Of course he'll appeal. I mean, this is an ass clown that would YOLO it all on a coin flip. Offhand, the Judge ruled he couldn't ~~lie~~ testify about lawyers approving fraud and I think there were some defense witnesses that weren't allowed. Anytime a lawyer objects and the judge has to make a decision, that's a potential grounds for an appeal. In 4 weeks of trial I bet there were a lot of objections! Plus there are a lot of decisions before the trial (excluding/including witnesses, testimony, evidence, etc)
yes, seemed quick for all the reasons sibling posts mention.
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.
Depends on the jurisdiction and sentencing guidelines, but my layman’s understanding is so that both parties have time to construct and file arguments over the severity of the sentence.
Anyone know where to get good details? Specifically: do they know where the money went? If not, how did they prove intent (I assume they proved intent)?
Edit: another thing I'm wondering is about jurisdiction, since most of this occurred offshore and didn't involve US customers.
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.
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.
RE: Where the money went - The customer's money was used for the following purposes:
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.
Molly White had excellent writeups for the entire trial. She even did excellent multi-hour livestreams going over her notes for the portion of the trial where she was physically present at the courtroom.
Of course. First, she calls the industry, "a grift". I've been in deeply into crypto since 2012 and dismissing peer-to-peer digital cash nothing but a "scam" in 2023 ignores a decade of progress and hard work, not to mention an actual working product used by thousands of people a year. Everyone actually using Bitcoin Cash, Ethereum and Monero know that 99.999% of what is out there is a scam for morons.
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.
> 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.
Doesn't that mean that you actually agree with her stance and reporting?
SBF was probably saying the same thing not so long ago. Of course it's possible to make money with/during a scam, I don't think anybody is disputing that?
The FTX bankruptcy case is tracking down where all the money went. SBF's criminal trial was more concerned with proving a small number of crimes with overwhelming evidence.
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.
The intent is that it was customer money. There is a fiduciary duty. They have separate custodial accounts for customer funds. They did not separate funds. It was clear as day.
> another thing I'm wondering is about jurisdiction, since most of this occurred offshore and didn't involve US customers
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.
Interestingly, FTX made a $500 million USD investment in Anthropic; supposedly, this was made while Anthropic was valued at $4.6 billion (unconfirmed). Now, Anthropic is nearing $30 billion.
Anyone know the latest on this? Is FTX going to sell that stake off to pay back the debts?
It's being debated in the bankruptcy court. Some creditors want to sell it off and others want to let it ride. Because this is crypto, some people want to issue a crypto token that represents claims on the estate.
Obviously they should divide it into a low-risk low-return tranche and a high-risk high-return tranche and market two tokens, with an LLM informed of the rules providing final arbitrage.
Naturally, we'll need to tokenize the risk tranche, leverage a decentralized finance protocol to auto-balance the portfolio, and have an AI-powered DAO govern the arbitrage, ensuring our digital assets stay liquid.
what disappoints me about this comment is how many of my well-educated non-tech friends would regard the number of technical terms here as a sign that it's a well-researched idea
thats also the kind of feedback I get in teachings from buisness advidors around pitching. "We need to see a little more proof you have credentials to pull off this idea. When we were talking last week you mentioned some technical terms, put a few of those in"
The onion stuff sounds bad but movie futures sound fine? Wouldn't it be good for studios to be able to hedge? I'm a little confused as to what the instrument is actually for, were it not for this law could I, like, short The Marvels?
It would be horrible and too easy to manipulate, think a fighter taking a dive.
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.
Is this any different than the incentives set up by conventional publicly listed companies? Like a CEO in principle could “take a dive” but their compensation discourages that.
CEOs are also usually not allowed to take short positions in the company they head. Analogously, actors should not be allowed to short movie futures they act in.
I think this is a terrible idea, but I fully endorse it because of the chance that it could hilariously result in FTX investors losing the same money twice.
If RWAs were adopted and the tokens were non-custodial then not much. The issue with FTX is it was a centralized company and all funds were fully custodial. And while all this was happening SBF was buddy buddy with Gary Gensler. Aka it was a tradfi problem, not a crypto problem.
There is only TradFi. Crypto grew up and was assimilated. There is only one holistic system of systems, one vast and immane, interwoven, interacting, multivariate, multinational dominion of dollars.
Customers sent real money to FTX expecting FTX to buy some coin and hold it on their behalf (because managing that properly themselves is out of scope for regular folks).
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.
That's very similar to what happens with stocks. When you buy a stock, it's Cede & co who actually own the physical certificates that transfer rights. There's a complicated web of contractual obligations between them and other DTCC companies that exists to give you essentially the same rights as if you were a true stockholder, but it's all being done "on your behalf" in a legal sense.
Unless you directly register your stock through a DRS transfer to the issuing agent for the company. This agent manages stock issued to insiders and employees as well but any stock holder can truly own their stock the same way the CEO of the company does. It’s a pain, takes forever, and brokers will play dumb and try to prevent it, but they legally must allow you.
Generally only worth it if you intend to hold your stock for some time (which you should)
Because nobody would've lost anything had they held onto their coins instead of keeping them in centralized exchanges which are essentially banks in all but name. One of the reasons cryptocurrency was invented was to free us from the banks but they reinvented the entire banking system instead on top of it.
It’s very interesting to me because when you put your money in a bank and it enters a bankruptcy proceeding, your account (which is in essence an unsecured loan you made to the bank) disappears into the bankruptcy estate, to be shared by the various tiers of creditors in order of priority (to wit: you lose your money). Of course, the FDIC protects you.
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.
Spoiler alert: it will be sold off to satisfy the debts of the bankrupt corporation. That's SOP for bankruptcy court, and it would take an extremely persuasive case to convince the court to do otherwise.
It's unclear there are buyers for this amount of private shares at the market price.
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.
There's a buyer for everything at the right price.
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.
If there's a way to sell it at a fair price, yes. Otherwise, they have a fiduciary responsibility to hold it until a buyer can be found to pay a fair price. They won't hold it just to let it ride though - that's correct. IANAL :-)
i dont get why the shares in the investment isn't just divvied up to each individual investor, and let them make a choice to sell or not. And if there's transaction costs involved in selling small amounts, it could be aggregated before divving up, and those who wants to sell can collectively sell and save on costs.
Holders can still band together as a single pot, like a fund which can count as only one investor.
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.
And now there are startups where you can place bids on private market stock without being a qualified investor or pushing the company into a spot where it has to go public.
Much like the infamous FTT token, just because it’s worth that much on paper doesn’t mean that is what you could sell it for today. I say this as a person with chunks of stock in a few private companies.
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.
In a slightly different universe, the literally criminal risk might have worked a little longer.
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.
Keep in mind that "NFTs representing digital art" are a subset of what NFTs are. GenAI might have impacted art tokens, but wouldn't affect NFTs as a whole.
That’s right, NFT’s are a tool for low talent charlatans to grift at scale off of laypeople by claiming they will make money buying them. The digital art was just one such con.
The concept of NFTs for art is pretty new. I first heard about the idea of NFTs in 2013 and that was using them for things like deeds to land and vehicles.
which is incredibly stupid because a nft is fundamentally incapable of solving these challenges (owning the nft means nothing if a court determines someone else owns the house)
... which remains a terrible idea, because what happens to your land or vehicle if you lose your keys / forget your pass phrase? Or if someone else phishes you?
The whole idea of GenAI is to make purely digital content "cheap."
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.
Copyright law has the exact same purpose for digital goods as it did for physical books. Copying books has not really been hard since the 1450s or so. Copyright has always been about maintaining the value of books and other art works in the face of vastly cheaper copying.
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.
If I'm a creditor in FTX, it's a pretty big gamble, and I'm definitely not sure I'd be willing to settle for "sure, give me some shares in some AI company...". A significant chance that value craters, after all.
As long as you’re able to sell those shares immediately, a bunch of money loaded investors will be waiting to get your fraction of the AI pie from you.
> As long as you’re able to sell those shares immediately
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.
I think that’s the most likely outcome: look for a buyer willing to take all the shares at market value, but also willing to offer shares to creditors willing to keep some Anthropic at a private valuation. Not sure if there’s a risk they’ll be more than a thousand people, triggering the need for an IPO — which presumably Anthropic would oppose.
It’s an interesting question. The shares are likely not transferrable without amending the LLC agreement or whatever. If you want in on Anthropic, though, and you know the FTX estate has to liquidate, then there’s a chance you can get to a good price; maybe less than $3B but probably not a ton, because lots of other people want in too.
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.
Lots of investors want in on Anthropic and OpenAI but can't. Getting access to shares to participate in this market (with market leaders) is not easy, especially not at scale. Amazon and Google were willing to pay an above-market premium to align strategically, but financial investors I can see do 80-90% of that valuation and be very happy.
They're buying it and holding it for the long run. Maybe it is as simple as letting them and other privileged parties buy more from FTX's stake and then redirecting the proceeds to each creditor.
They're going through normal bankruptcy stuff and may liquidate the Anthropic stake. It looks at this point like there's likely going to be money enough to pay all creditors, which is just hilarious.
In fact, there's a significant market right now for purchasing FTX claims precisely because of this Anthropic investment. The bet is that you can buy the FTX claim for 35 or 40 cents on the dollar, and get 75 or 80 cents on the dollar if the Anthropic value gets unlocked during the bankruptcy process.
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.
I let my mtgox claim ride and regret it. I could have sold the claim in 2015, bought bitcoin and had far more cash now.
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.
There is plenty of case law. Mtgox creditors are just really lucky that they’ll be made more than whole because any excess is supposed to go to the equity holders per bankruptcy law.
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.
Even more interestingly, Anthropic isn't traditionally structured: it's a Long-Term Benefit Trust [1]. That's not say shares can't be sold, but, rather, shareholders have very little governance rights. Debatable whether this is good, e.g. Meta's success being tied to Zuck's large holdings. On the other hand, you have WeWork.
So, if you count this, and if you count all the money that has been recovered, he didn't actually steal anything...
I mean that, all considered, there is more money now than when he started the company.
https://time.com/6330323/sbf-trial-biggest-bombshells/ - interesting in this article showing what Alameda spent their stolen money on is that they made a $500million bet/investment on Anthropic, who Google just committed to investing $2billion into. Could have turned out great!
In practice, I don't think it matters. Here is why:
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.
Those are to political action committees, not politicians. The probably spent most or all of it during the last election cycle. If they raise more money, you can go after that but what are you going to do if they don’t raise more money?
You don't have to pick an exact moment, but there are several clear moments of fraud. The biggest moment of fraud was whenever alameda's FTX account was allowed to have a riskier position than a normal account, including holding a negative balance. This is something FTX specifically allowed and publicly lied about (SBF on twitter said they were treated as a regular account, which we now know is false).
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.
Hold your horses! What startups are lying about what they do? I don’t get the impression this is the case at all. MVP and move fast tactics are not fraud. Saying your SOC2 compliant or something when you are not probably is.
I know first hand of YC founders lying to (corporate) customers on their business size, revenue, etc in order to secure business. Is that fraud? At best its an unethical and dubious business practice.
It is only fraud if a jury of your peers would think it is fraud, which is probably a higher bar than you think.
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.
> Most of the fraud you are talking about also wouldn’t have the explicit benefit directly to the founders
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.
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.
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.
I'm sure there was a long slippery slope to more and more brazen fraud, but for what he should have done instead that's a very very simple question to answer. He shouldn't have committed fraud. All the illegal stuff he did with comingling funds and stuff? Just - don't do that.
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.
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.
Good find, but worth noting that this is accusing him of front-running when what he actually did was dumber and more criminal: using FTX customer deposits to cover losses on the Alameda side.
I imagine SBF's charges are more serious than a front-running charge. The prosecution also may not have had sufficient evidence of front-running to get the charges to stick.
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.
> any exchange in such close company with a hedge fund should always be suspected of front-running
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."
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.
> 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.
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'm pretty sure it was more than just one 'edgy talk' with his GF, but one of many concrete examples of his attitude towards taking risks and especially taking risks that affect others who did not sign up for the risk.
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.
I'm commenting based on the reporting that I read indicating that he ALSO said confirmed it under oath, and other reporting indicating that his GF and others have long indicated that this was his overall attitude, i.e., that SBF taking any risk was OK as long as the possible outcome was positive, regardless of whether the more likely outcome was harm to many other people who did not agree to take the risk.
The "pretty sure" caveat is that I cannot offhand recite chapter and verse of all the citations.
Front-running efficacy can be measured in milliseconds. It's a world where microwave towers sometimes replace fiber lines, to gain a few milliseconds of advantage. That is, when the front-runner isn't "in-house", which Alameda had ample opportunity to be. Alameda and FTX were separate legal entities, but Sam largely headed both. Alameda front-running servers, in theory, could have been running right along side FTX servers, with only inches of network-induced latency.
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.
> I wasn't following the case closely enough, but did the prosecution have access to Alameda source code, or was it only FTX?
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.
I'm not in the industry. That said, it's my understanding that "front-running" as a term of art necessarily implies some sort of illegal behavior (at least in the US and European markets), but being clever with physics (microwave towers, bouncing signals off the ionosphere, etc.) is fair game, and if you can pull off some profitable arbitrage trades with that sort of setup, you're in the clear.
It's probably a result of not having complete information and giving benefit of the doubt.
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.
This is actually one of the reasons why the FTX collapse came as a surprise for most crypto insiders. Everyone assumed that Alameda Research (the trading arm of FTX) was printing money, alas it was losing billions. Sam Trabuco, co-founder of Alameda, who has been surprisingly absent from any trial, was instrumental in creating this illusion of success for Alameda.
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 .
not with crypto though, because it's all a scam or a front, there is no actually successful crypto projects, unless you count successful as having scammed a bunch of money out of people's hands, in which case, yes theyre all pretty much successful
The poster accused SBF of front running his customers but comments underneath seem skeptical:
>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'?
In crypto community everybody is calling everybody a fraud. Probably because in the early days of the Bitcoin and the altcoins, the industry was largely unregulated with a lot of scams going around. But nowadays, governments seem to be catching up.
these subreddits are/were absolutely full to the brim with bots/adversarial actors. it's obvious after spending any time on them. the incentive to manipulate is just too high, and the ease with which to do it is too low
Exactly. Right now on the subreddit there is a post about how a guy plans to invest 2% of his net worth into bitcoin and most of the comments are mocking him for not investing 90-100%.
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.
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. ;)
great idea for a trader. scrape anything where people say something like "this is so f* dumb I don't have the time to explain it" as it could be a black swan and call puts against it.
Probably. It's up to the judge, but typically post-conviction release has a higher bar than pre-trial release. So since SBF was detailed pre-trial, it's very likely he'll be detained post-conviction as well.
I would love to know why. I don’t see any new great thing it can do. Who are these people pouring in billions in a world with real interest rates. Criminals moving money?
Different world views than you probably have. A person who thinks the USD is stable and the stock market is priced reasonably is going to have a different attitude than one who thinks the USD is going through its riskiest in modern history and that the stock market is looking more and more like an astronomically sized bubble, all with WW3 looming. And then there's the guy in the middle who's just diversifying to try to maximize his gain (or minimize his risk) across all possible outcomes.
We don't know yet, sentencing is separate from the trial that determines innocence or guilt.
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.
> The judge will have to abide by the federal sentencing guidelines
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.
The judge will not in fact have to abide by the guidelines, which are advisory, and are especially advisory in sui generis trials like this where the damages and victim counts blow out the guideline charts.
Damages blowing out the charts just means a very high guidelines offense level, it doesn't make the guidelines any less applicable (and there's not really charts for victim numbers, there's a few categories for financial offenses, but mainly the guidelines expect beyond a few the aggregate loss factor to handle it, and by the time you blow the top off that chart, you've also very nearly (with just that factor and the base offense level) maxed out to a sentence of life or whatever the maximum is for the offenses on which you were convicted -- it only takes a few additional modifiers like having a substantial portion of the criminal conduct outside of the US to do that.
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.
It is sad there isn't some easy linear calculation like divide the amount defrauded by minimum wage and sentence is that number divided by 8 in days. It is always sad when people get discounts just because they stole lot of money compared to some that stole little...
By the federal guidelines, the base sentence for somebody who stole more than 10mm and defrauded more than 500 people is life.
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.
That's what's possible if sentencing guidelines weren't a thing.
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.
> That's what's possible if sentencing guidelines weren't a thing.
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.
I feel like the zeitgeist was "the world economy got cratered by these assholes in NYC, and we need an easy guy to convict" and Madoff was just _there_. Not that he didn't deserve it, but I still don't see SBF getting Madoff-level time.
He was worse than Sam Bankman-Fried. First, his scam lasted decades. Second, he was much better at hiding his crime. Third, he destroyed his family (one of his sons committed suicide, and because of this, his wife ended up destitute and alone).
Madoff was way worse than SBF, but for other reasons IMHO. Madoff was a pure scam, it was a complete lie from the start.
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.
I reply to my own comment because I can't edit it anymore, just to say that in fact there are many more similarities between Madoff and SBF than I first thought.
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.
> You’d think this MIT graduate would wise up, but he never did.
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.
> there really is such a thing as a person with a lot of book-learning but less common sense than a sea slug
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."
The craziest thing to me is that when he was saying things like that noone in the mainstream media was questioning him. The FT had a very flattering lunch interview with him shortly before his demise. It was embarrassing how they were portraying him.
Honestly my completely outside the valley impression is that VC operates a lot on pedigree and connections.
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)
Maybe not the mainstream media but I feel like a lot people, especially in the Bitcoin community, were suspicious of him. He just screamed grifter to me. I never really bought his arbitrage story either and wouldn't be surprised if that was not his first scam.
The arbitrage story definitely seems bogus. People have been aware of difference in bitcoin price across Asia since like the beginning of bitcoin - I don't think it is any huge billion $ opportunity.
Now Tether on the other hand.. I would not be surprised if that has a lot to do with it.
I was running an arbitrage bot well before he claims to have started arbitrage and even back then, it was competitive enough that there weren't tons of money to be made, especially considering all the risks and costs involved. In those days, a relatively common scam involved setting up an investment scheme that promised high returns thanks to "arbitrage trading" (but which was really just a ponzi scheme). I wouldn't be surprised if he was involved in something like that.
Maybe you did, but check the subreddit for bitcoin and cryptocurrency for posts before the FTX collapse. The prevailing sentiment, I recall, was that FTX was less scammy than competitors such as Celsius and Voyager, because the rewards for staking on FTX wasn't quite as absurd as the others. I think a lot of crypto investors thought Sam was the real deal, and that's one reason why they were able to attract so many customers.
But you had Zeke Faux, a specialist, going there, looking at SBF screen and seeing nothing too special too.
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.
I don't suggest to "destroy" any company, or to say they are guilty of things without proof.
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.
Agreed but we only ask that after the conspiracy was revealed and honestly it's so mindblowingly stupid it's hard to imagine anyone could have thought they used QuickBooks or just thad no accountant.
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.
> The craziest thing to me is that when he was saying things like that noone in the mainstream media was questioning him.
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.
He came very close to getting away with it all. If the investments had panned out a little differently he would have been able to stay solvent and no one would have really noticed the regulation breaking.
Right, and assumes he didn't abandon the Kelly Criterion for the mentality of "keep playing double-or-nothing even when you win":
>>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.
Exactly. Evading disaster doesn't make someone like this reconsider their decision making process and act smarter next time, it shows them that they're a goddamn genius who can do no wrong.
> Well, what's the difference between an unhinged, drug-addled loony and an eccentric visionary genius?
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.
To be frank, the value proposition of those investments was never what the companies claimed they did but how much money they could bring in before going bust. And of course some of those companies were also useful by fostering acceptance of ideas those investors benefit from: for example, a big part of the "blockchain" and "smart contracts" narrative was privatization (or "democratization") of government functions (e.g. managing land deeds, educational certifications and other claims).
Not to mention that a big part of investing in start ups is just ape jpegs with extra steps (i.e. "greater fool" theory).
It is mainstream culture to not question (at least temporarily) financially successful businessmen. Financial success in the eyes of many must mean, that they are doing something right. But that "something" quickly is left out and the conclusion becomes "doing all things right". Basically ethics is supplanted by how capitalism works.
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.
The difference being Elon has a history of multiple successful business and products. And didn't defraud anyone in the process. (Note he is still a narcissistic asshole but he is a successful narcissistic ass and we generally value competence higher than personality)
Think that's crazy? Read what HN commenters were saying about FTX before the collapse. There were skeptics, for sure. But plenty of people here who thought sam was smart, good at business, and more prudent and above board than other crypto CEOs. Many users here have a blindspot when it comes to detecting bullshit. Sam reminded us of ourselves, so we believed him.
If you like that, you should hear what he had to say about Shakespeare:
"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.
That's really insightful into how this guy works.
He's judging everything off probabilities to an egregious degree.
He's also utilitarian, which doesn't really offer a foundation for any kind of morality because there's no provision against the ends justifying the means.
As I mention in a thread below I'm using "book-smart" as a concise idiomatic way of saying "educated and talented in a traditional academic field", such as mathematics in this case. Kind of unfortunate that I had forgotten that SBF is not actually a big reader. But he did graduate from MIT: perhaps they'll let him hang his diploma on the wall of his cell.
He seems smart and excellent at everything he sets his mind to. He just opted to set his mind to math and things that relate to math. That's an easy way to grow up and become a jerk.
But on the other hand, I can think of a few books that really might have helped him. The Emperor's New Clothes, and also Extraordinary Popular Delusions And The Madness Of Crowds (dated now, still a good read).
That's been my impression of SBF since FTX collapsed. Quite book smart, but zero experience in building a major service that custodies billions in other peoples' money.
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.
This is it exactly. He was running a confidence game. There are some big parallels with Bernie Madoff in fact. Spinning a story of financial genius out of a lucky break he got early on that had higher than typical returns, but in a market small enough to fly under the radar of the big players. The big difference is that SBF had less sense and let it spin out of control way too fast and hastened his own demise. At least Madoff got to live most of his life before he got sent to jail.
I don't think SBF was a scammer in the Bernie Madoff sense. I don't think he set out to intentionally scam anyone. I just think he was so arrogant that he thought he could do whatever he wanted. He thinks he's smart and the rest of the world is dumb. He thinks the legal system is just something to "route around." Not because he wants to steal money but because, if there's money in "his" account, does it really matter if it technically belongs to a customer? He seeemed genuinely surprised at the verdict, and he's acted all along as if he were, not exactly innocent but undeserving of all this bother.
Yeah, Madoff was a scammer, SBF is a megalomaniac. He thought he couldn't fail, and thus the rules didn't apply to him. So, when he did (predictably) fail his reaction as basically a big "I didn't mean to do anything wrong, therefore I shouldn't be punished" makes sense. But hey you know what, this is why we have rules. Not following the rules was actually the wrong thing, not losing people's money, which--crucially--he couldn't have done had he followed the rules.
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 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.
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.
There's a possibility that the customers of FTX recover most or all of their money, thanks to SBF's investments.
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.)
SBF strikes me as someone who firmly believes ends-justify-the-means, and as such, if all his victims could be made whole, then he couldn't have committed any fraud. However, Matt Levine put it best:
> 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.
Like every other decision SBF would prefer you not examine: It fits because the ends justify the means.
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.
The safety (or not) of the insurance fund is not related to the need for it. The need would come from a counterparty defaulting - which is generally unrelated.
FTX had "infinite money", so the actual insurance fund was that supply of money; having a pretend number on the front page was simpler than actually implementing it; in a sense it was a favor to investors, because it saved on operational costs.
That's typical startup shenanigans, not specific to FTX. Lying to customers and embellishing the truth is business as usual. I'm sure they hoped that at one point they'd turn this into a real insurance fund.
That's the thing - he successfully ran a lot of involved arbitrage and other legitimate trading tricks before he decided to run the confidence game. Unlike Madoff, he could have retired before the FTX scam with "buy a jet every year" kind of cash.
He found a niche in a Japanese exchange that was difficult to break into due to onerous banking regulations. Made a nice little chunk of change but it was a small potatoes thing. The numbers only look big because it was early days of crypto and the inherent inflation was through the roof.
I think that's either untrue, or at least there are different levels of scaminess. I put some money into FTX to short Celsius (another scam) and would have been happy with the service if they hadn't gone and stolen my money. I mean you could argue that any trading of crypto is inherently a scam but there are some consenting adults who chose to do it.
I am talking about people who "build" these exchanges and platforms and new protocols and shitcoins. Anyone peddling anything under Web3, DeFi, Blockchain, NFT etc is a scammer. People who think they are trading or investing are the suckers.
That's a bit spicy. Don't forget we're on the Y Combinator forums, so this may read as an attack against their investment strategy - not even dang can protect us here.
It had to do with lack of internal controls that safeguard the organization and its custodied assets from both employee mistakes and fraud. That's a part of engineering high-assurance high-integrity systems and SOP at big exchanges, banks, and similar orgs.
SBF has just been convicted of committing intentional fraud, not just "lack of internal controls". Was it an oversight to use rand() to generate your deposit insurance figures, or add that switch to allow Alameda unlimited rights to dip into the customer fund kitty?
Lack of internal controls will cause some peon that you employ to steal money from you/lose your money.
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.
Loose, or rather non existant, controls also allow you, as senior management to get away with even worse fraud without one of your employees realizing.
He's not senior management. He's the owner. It doesn't matter what your controls are, if he wants you to eat paste and hand him over the keys to the production database so that he could delete it, you can comply, or he can fire you.
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's what internal controls are there for to prevent. Especially for owner-CEOs. FTX set up shop somewhere in the carribean just to avoid that kind of oversight and control. I can hardly imagine a bigger red flag than that.
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.
Maybe the rubes can be exonerated for falling to the incessant hyping of crypto but a smart person should know all crypto is a scam because the Washington Post, the bloody Washington Post told you it's either a Ponzi or a pyramid scheme in 2015. In 2017 you had Preston Byrne challenging that article in that he considered the scam to be significantly different from a Ponzi and gave it a new name, a "Nakamoto scheme" (as an aside, Jorge Stolfi will continue the debate in 2020 where he considers the difference not to be significant and I find his arguments to be rather convincing). But he didn't, not for one second, challenged the fact it is a scam. Attack of the 50 Foot Blockchain came out in July 2017. There's no way to enter the crypto space without mens rea in 2019.
As someone who’s never been into crypto, the general discourse when I look in crypto-related subreddits suggests that the very fact that mainstream media were calling it a Ponzi scheme is one of the reasons you should invest in crypto.
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
As someone who made lots of money on crypto early on, then didn't touch it for many years, made lots of money again and haven't touched it since I can tell you (and others) what is a winning strategy for "investing" in crypto.
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!
It's not an investment. You are gambling. And even worse, you are gambling by robbing the less informed. Make no mistake: every cent you made is a cent someone else lost -- even if they haven't realized their loss yet, it's there. And even worse, it's not a cent, it's a bit more because bitcoin is not even a zero sum game but a negative sum game and those are inherently scam. But, I guess, good for you?
It's effectively a pyramid scheme in which the potential marks are everyone in the world. It's not that much of a surprise that crypto continues to have money pumped into it - there's an almost never ending supply of greater fools.
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.
It has real value for as long as there are people who need a currency that isn't controlled by a government. In other words, it's an investment in the working capital of the criminal underworld. (and tinfoil-hatters) The money you put in is probably used to commit crimes of some sort, and the money you take out was probably the result of some crime. But with coins like Bitcoin that have a distributed trust in all miners to maintain the algorithm, I don't think you can say it's a scam.
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.
Very funny, did you loose BTW? Every "investment" is a gamble of sorts. And how can it be gambling and a ponzi scheme at the same time?
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.
> 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
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.)
>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 no
Perhaps this is my failure to express this clearly, but I thought it obvious you don't invest if you think it's bullshit.
Well, yeah: If it's bullshit, you invest and then make sure you spread the word so there are enough people under you in the pyramid to keep you solvent.
Haha, very funny. I thought its obvious you don't invest if its bullshit. Also the whole point of using disposable income is that even if it tanks you stay "solvent". And no, look through my decade long comment history and you'll see not a single instance of me promoting crypto to anyone. In fact I actively discourage people who are looking for real investment from it.
This critique is basically saying that cryptocurrencies have Ponzi-esque economics or more aptly named greater-fools economics. The argument being that as they have no cash-flows, any appreciation must come from future investors piling into the asset. I think this is a great optic to look at the problem as it focuses on the economic design, its sustainability, and its valuation in terms of future cash-flows.
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.
What you are saying is you can invest Ether (i.e., stake it) and then might earn a return in Ether (not USD). Any appreciation of Ether vs USD still needs to come from outside demand for Ether.
This is a subtle point but the fee revenues that the network observes are best understood as priced in fiat currency, even if denominated in ETH. In much the same way the earnings of Microsoft in Europe are to be understood as priced in EUR even if denominated in USD in their financial reports. The reason for it is basically that the network offers a service (transaction settlement layer) that provides some value to its users and has some costs. The cost is set dynamically due to the scarcity of blockspace to include transactions, if the cost is too high it will be outcompeted with all other alternative uses of that money. They may settle in a different chain, they may settle using a centralized provider (e.g. Visa, Paypal), they may not interact at all with the network, etc... This makes it so, at the margin, the network revenues are inherently priced in fiat. Because prices will be set at the point where use of the network is discouraged given the value provided and all other alternative uses of that money.
Additionally, the fees of the network can only be paid in ETH, which means that any use of the network implies ETH demand.
If there were no outside demand for Ether then Ether would we worthless in USD. What you are saying is, that there is demand for the network services from beyond existing Ether holders, thereby creating demand for Ether by USD (or other currency) holders.
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.
> If there were no outside demand for Ether then Ether would we worthless in USD. What you are saying is, that there is demand for the network services from beyond existing Ether holders, thereby creating demand for Ether by USD (or other currency) holders.
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.
Thank you, likewise, needs two to have a rational discussion.
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).
>>> Did you fly to the Super Bowl in a private plane?
> 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.
Investment into a corporation becomes capital. It is used to buy resources which when combined properly can be sold for more than the raw cost. You are entitled to a share of these profits in the form of dividends.
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.
Clearly currencies don't pay dividends but doesn't matter for this argument. There's a fair chunk of people treating stocks exactly the way gp described. To conclude from that that all stocks are a ponzi is as retarded as it is to conclude all crypto is a ponzi
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...
Is crypto not a ponzi as an investment, though? Who in their right mind buys currency and sits on it as an investment? If it has utility as a currency, then use it as one, otherwise it is just speculative, and a speculative investment which relies on other people to buy out your stake and has no positive cash flow is a ponzi. No?
Y'all really should read Stolfi because he carefully addresses all these, gold stock etc
> 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 commodity use of gold is very minor. It's liked in jewelry not for its utility, but its prestige. So once again gold jewelry holders look an awful lot like investors. Just like how ETH enthusiasts do, even if they also use it to perform tasks with smart contracts.
Stocks are ownership of something real. The company you own a share of does things in the real world. They can make intelligent (or stupid) decisions about the company strategy. They can enter new markets, or launch new products. They can share a dividend with the owners.
Obviously there's still investment bubbles - but underlying it all is ownership in a corporation.
Not necessarily but some financial products based on stocks can be and meme stocks usually function much like ponzi schemes (i.e. buying a stock, telling everyone else to buy the stock because it'll go to the moon, then selling the stock before everyone else finds out they were the only ones adding value to it, forcing them to sell at a loss).
> If you put in $10K when WaPo told you it was a Ponzi, you'd have $1.6M today.
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.
Since it's apparently not obvious, long term holding your coins in a centralized exchange misses the entire point of crypto. Not understanding that takes some skill indeed.
Oh, neat. So misplacing your hardware wallet also requires lots of skill. Gotta love that rugged libertarian individualism that turns bad luck into stupidity and good luck into galaxy brains.
It says the bloody Washington Post has no obvious skill at predicting the future, therefore any statements they make should be taken with a hefty dose of salt.
He wouldn't want a bunch of proper engineering because that would prevent him from betting with billions of customers' deposits that were supposed to be safe.
You don’t need a few years’ apprenticeship at a real exchange or custodial service to know that exchanges are not permitted to gamble with customer money, to spend it on private planes or arena naming rights, or to allow your other company to go into millions of debt.
IMO his downfall was thinking that he was smarter than everyone else. When you think everyone is a rube, you think you can get out of the mess you are in by just explaining yourself, writing a bunch of blog posts and tweets and going on a media blitz. And in the process of doing all of that he just dug the hole he was in 10x deeper.
Not really. The Dunning Kruger effect was that those in the bottom quartile of competency greatly overestimated their own competency. He wasn't incompetent. Just had good old fashion hubris.
The person I'm responding to was making the case that he was incompetent at his job:
> 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.
No, it's a specific phenomenon about lack of raw cognitive competence, like for general tasks in life, not lack of experience in a given domain. The point of the DK effect was even with experience, the disparity between ones competence and awareness of ones relative competence doesn't improve. The original paper opens with an anecdote about a bank robber that couldn't believe he was caught because he "wore the juice" — he was under the impression that lemon juice would make his face invisible on camera.
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.
> No, it's a specific phenomenon about lack of raw cognitive competence, like for general tasks in life, not lack of experience in a given domain. T
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.
There's also a fact of human nature that smart people often don't understand: you can be the smartest person in the world and still be stupid under the right circumstances.
Quite right. One more related fact: competence in area X does not necessarily translate into competence in area Y, even if X seems to be a much more difficult thing than Y.
True--but nobody made him talk to the media in the time before the trial, and nobody made him take the stand and thereby make himself vulnerable to cross examination. So in addition to "dishonest," "conman," "thief," and "convicted felon likely to die in federal prison," we can also reasonably call him "dumbass".
Perhaps the fact that his wealthy Stanford lawyer parents have always provided ample bubble wrap around him his whole life that has internalized making excuses for things and being used to getting wrapped in more bubble wrap rather than face negative consequence.
This is what comes to mind imo. Michael Lewis describes his ability to dance around questions as dazzling, but I have to wonder if his parents would have just called him out on his bullshit a little more often if he might not have gotten himself in as much trouble later.
Audience. What may come across as question dance dazzle might suffice to impress or allay concerns of certain people (employees, investors, etc), but it's not probable to work the same under oath and the techniques of prosecution. It's hard to dance around evidence with what you say, no matter how its said, with evidence to the contradictory put right in front of the court.
We did! He was doing exactly what he did to everyone else whose questions he tried to evade, it's just that this time people called him on it (and had legal power to compel non-evasive answers).
I typically think that what makes MIT the greatest is their marketing department. They do a lot of great things, but what they do best is telling everyone that they are the best.
That assumes the fourish years of being surrounded by other students and professors who are smarter than you, and work harden than you, along with making friends with them
does nothing for the students after their time there. Students entering MIT are used to being the smartest at their highschool and coasting through it. So it's a shock when those things are no longer true. (tbc, the same thing happens at other schools to a lesser degree.
Yes but there's plenty of institutions that all do what MIT does and field dependent probably better. It's simply not the case that MIT always represents the best all the time. It doesn't even make sense that that could be true. And why would you want it to be unless you were the MIT marketing department?
First, a university is great by doing great stuff and producing great graduates. Then those great graduates confirm the greatness of the university. And then, ultimately, graduates are great simply by coming from an university that once did great things.
every other month they have another "breakthrough" in materials science that is going to bring us more energy/clean water from recycled toxic sludge, but somehow you never hear the follow-ups of it ever being deployed...
It's quite insane that your society puts the onus on the pedestrians not to get hit, and even makes it illegal to cross the road. It should be the licensed drivers' responsibility to not hit someone. And in the middle of a campus cars should of course yield to pedestrians. Such a car-centric world.
In the same vein, you could find through experimentation that the speed at which you can finally get hit by a car without someone claiming it's your fault for being too quick on your bicycle is to be approximately stationary
But not so stationary, because then you were not visible enough
Schrödinger's cyclist, both too slow and too fast at the same time. When behind on a road: "you're holding up traffic with your slow cycling!". When later causing an accident for not yielding to a cyclist "he came out of nowhere in a reckless speed!".
Well obviously then you should have been wearing a high-viz vest and a full Christmas tree's worth of blinking lights. Then when a driver hits you they can say they were distracted by all the visual effects.
It's a little more complicated than I've laid out here. There's not a hard boundary between the MIT campus and the rest of the city, in contrast with Harvard Yard on the other side of Cambridge, which is surrounded by high brick walls. Cambridge is an old city and MIT is, for a New England university, fairly young--not to mention that for the first few decades it was at a different location than today, in Boston proper. I'm pretty sure the road was there long before the first university building.
Assume that laws gave people the expectation that they could just step out in front of a 3,500 pound moving vehicle and it would instantly stop. The world would probably be a lot less safe for pedestrians than it is today. The laws of physics come into play to at least some extent.
Not for trains - there's a shared expectation that pedestrians should not access the track.
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.
* 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.
Yes, and on top of that if there were a train line on campus with any high speed train traffic it would be surrounded by tall fences and the pedestrians would be provided with off-level crossing. (One or more tunnels and/or bridges)
This is exactly the case a little ways away at Tufts University in the city of Medford. There's a busy train line that runs through the campus and it's fenced off. Students do sometimes find ways in there and use the right-of-way as a shortcut. Sometimes they get killed doing this--which is why the fence is there in the first place.
Perhaps so, but I also think this situation is less of an indictment upon academia than it is upon, say, bankers - which is basically what his career was, both before his crypto work, and during it.
After all, it's not difficult to find an effective book teaching one to safely cross a road.
I've lived in 6 different cities in my lifetime, in every one they claimed they had the worst drivers in the USA.
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.
I found what I think is probably the same report. This one anyway had DC and Baltimore, two cities where I've personally driven a good deal, as the worst, and I would believe that.
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.
I saw this when visiting Washington University in St. Louis too! Street, plenty of cars, light turns red, students continue to walk into the crossing directly in front of an oncoming car which brakes and honks.
>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.
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".
the whole "book learning nerd not living in the real world" is quite cliche these days, there are much better descriptors such as emotional, literary, mathematical, etc intelligences. Someone may be high in all of them or in just one or none.
I mean, I explicitly _said_ it was a cliche. But I'd argue that it's not wrong. I guess if I had to describe the kind of person I'm thinking of in a more nuanced way, I'd say they're educated and very good, often brilliant, in their chosen work, but both have low emotional intelligence and are lacking a sort of...I don't know how to put it exactly...basic ability to take care of themselves.
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.
that "almost hit by car" anecdote is complete nonsense. There is plentiful jay-walking in Boston/Cambridge (just as there is in New York City, and has been recently legalized in California). To an outsider, perhaps it looks like people are dangerously walking into traffic?
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 thing I learned very quickly while living in Boston is that no one will ever stop for you if you let them think they can keep going without running you over, but drivers do expect pedestrians to just walk into the street and are prepared for it. If you want to cross at a spot without a signal or stop sign, you have to act like you have no idea that there's any cars coming while still keeping an eye on them in case they genuinely didn't see you.
The end result looks like a lot of people have death wishes, but the pedestrian injury rate isn't actually unusually high.
Boston or Cambridge? Coming from NYC I was shocked at the fact that cars in Cambridge would constantly yield to me, even in situations where I really didn't expect it.
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...
I went to Purdue. The joke among engineering students was that we used calculus to compute trajectories and to avoid "elastic" collisions with motor vehicles when crossing State Street (the main road through campus). And that the liberal arts students got to go to some secret class where they were taught how to do that without calculus.
Back then, painted crosswalks would have been a waste of paint.
As much as this appeals to me, it doesn't seem feasible: the problem is that this road ends at the Harvard Bridge (so called because it isn't near Harvard, because Boston), which crosses the river into Boston. Close this off, and traffic on the two adjacent river crossings, the Longfellow and BU Bridges, goes from "terrible" to "you should have walked".
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.
Oh come on, you’re just using a stereotype here and hurling it at MIT students as a whole it’s almost as if the remark is just supposed to make you feel better about yourself. What you said isn’t even relevant to the FTX case and it’s highly unlikely that someone who’s “just book-smart” will have SBF’s connections to commit a crime of this scale.
“if you’d like to gain greater insight about “valuable boxes” with no economic use case that go “to infinity” because of “the bullishness of people’s usage of the box”, don’t forget to sign up for the FT’s Crypto and Digital Assets Summit beginning Tuesday.”
This is why it's silly to say that the prosecution had an airtight case. It's like saying the winning fighter boxed perfectly, when actually the other one just kept smashing his own face into the ground.
“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.)
The most unbelievable behavior on cross was described by Tiffany Fong. The prosecutor asked Sam to read a section on "preventing clawbacks", which was a head and then some text underneath. Sam read the text underneath out loud. Then she asked him to read the headline, "Preventing Clawbacks", too. So he said the following: "The first word is 'preventing'. The second word is 'clawbacks'."
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.
Weird. I don't believe he even had an obligation to read any of it.
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?
That's what the judge and your lawyers are for. As you say, you can't randomly ask people to read something. It would have been a document that he wrote, or approved, or something -- something already admitted into evidence. The putative purpose would be to ask SBF more questions about the evidence, which is fair.
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.
You're not really listening. No, you can't be asked to do cartwheels. But you can be asked to read something relevant to the case from a document that's been submitted as evidence (and thus already been vetted as relevant to the case).
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.
You’re not really disagreeing with the person you’re responding to. He finds it absurd that these kinds of theatrics are allowed, and you just explain that they are in fact allowed.
...and the fact that rules for testimony and cross-examination have been developed and challenged adversarially for hundreds of years; so if the really are as absurd as they think, they probably already would have been changed; and in any case, SBF's lawyers still have a chance to change them.
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.
> And once on the stand, should he do cartwheels, gesture, and mayhap fart upon command?
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.
what are you actually arguing? because he is compelled to answer questions, why is that different from being compelled to read a headline for a question of "did you write that/approve that" etc.
he agreed to take the stand, he agreed to everything. what would the lawyer object with "your honor, they're making him read" lmao
>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!
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.
About reading statements maligning oneself, you are right that a presumed innocent person doesn’t have to do this. But SBF waived that right when he agreed to testify. This is why it’s considered a bad idea to take the witness stand when you are the accused…
I too am confused. Is it not the barrister's job to respond on behalf of the accused? Presumably Sam Bankman-Fried was not actually obliged to read anything aloud (except of course the court's oath), and just chose to for some reason.
Sam Bankman-Fried was tried in the US, where we don't have barristers. You may find yourself less confused if you brush up on the basics of the American legal system.
Weird. Thus seems quite theatrical to me, but I just realised something.
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.
In earlier centuries, one way to avoid a criminal trial was to claim "the benefit of clergy". Members of the clergy (priests, nuns, etc) were supposed to be tried only by their own organizations. The standard test to prove that you were a member of the clergy was to read a passage from a bible. One passage was very commonly chosen for this, so if you wanted to pretend to be clergy, you needed to memorize about 2 paragraphs. In criminal trials, a guilty verdict was followed by 3 possible sentences: flogging, transportation (exile/banishment) to America/Australia, or execution (hanging for peasants, beheading for nobility).
I feel like you don't think his lawyers didn't have a chance to object, they certainly did, then it's up to the judge/laws to say if it's valid to ask the witness to read WHAT THEY HAD WRITTEN. They did not object. He read the paper.
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.
With or without testifying he cut a remarkably unlikeable figure. Smug, aloof, arrogant and condescending, honestly much more so than a typical white collar defendant. I suppose his fatal flaw, though was not having anyone else to blame.
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.
I'm no lawyer, but I think that the defense has to be presented with all the evidence that will be used in the prosecution's case, before the trial starts.
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.
Yes, they’re obligated to turn over everything they’ll use in their case. They’re also obligated to turn over everything that could help the defendant (exculpatory evidence).
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.
Any defense lawyer worth their salt would have known everything the prosecution had. It all came from ftx and sbf himself in one form or another. It is very unlikely that anything presented on rebuttal was a surprise.
My comment was replying to the question of whether they’d get it (and similar materials) directly from the prosecution, not whether they’d get it some other way.
If it’s anything like other legal systems, they would have to provide it all in advance. Otherwise you could start using something inadmissible in front of the jury.
> You’d think this MIT graduate would wise up, but he never did.
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.
> 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.
That is an invite to an interesting conversation about fame, media, publication, status, hierachy, "alpha"-ness, reproduction, entitlement, culture, etc!
Advocates are the Scottish equivalent of barristers - specialised lawyers who can appear in the highest courts. During training one of the things they have to do is act as an unpaid assistant for a senior junior (but not a senior!) advocate for a year or so - during this time they are known as Advocate's Devils.
The process is known as devilling but, you might expect, this means different things in different parts of the UK:
There is an hr long interview with Michael Lewis about his time with SBF and its fascinating how his unusually high aptitude for jane street type decision making under uncertainty was able to paper over his unusually high emotional disconnectedness.
Great interview (available as podcast and on YouTube)
I watched the 60 minutes with Lewis who used to be one of my favourite writers but I had to do a 180 after I saw him defending SBF for the whole time. It was hard to watch and made me question the accuracy of every single book of his that I had read.
The root cause is that he wrote most of the book before the fraud came out, so the tone is wrong.
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.
Actually Lewis explicitly says in the interview that he didn't write a word before the indictment and was actually complaining he didn't have a way to end the story. True or not I can't say but I get the feeling he has considered SBF as a subject deeply and is responding to wholly justified criticism of the recklessness by filling in the gaps and that comes across as a defensive position but if the interview had been shining praise on SBF then Lewis may have come off looking like a harsh critic for the same reason of balancing out the picture. Perhaps I am being too generous but the whole saga is fascinating partly because there are so many possible interpretations of causes beyond the facts involved.
> You’d think this MIT graduate would wise up, but he never did
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.
The most time you get off your sentence in the federal system is 54 days per year of imprisonment [0]. That's roughly a 1:7 ratio. If he's sentenced to 14 years for example (not by any stretch of the imagination an unbelievable scenario), he'd only get 2 years off for "good behavior," thus serving 12 instead of 14.
"Getting out early" is not something done at the federal level. The President could pardon him. That's about it.
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.
I feel like until SBF has actually been diagnosed as having autism, it's not a good idea to treat his open disregard for the decorum in a court of law as being the result of autism.
I guess he didn't have the money to pay for a good defense team, or didn't listen. Pretty amateur hour what he did. Made it very easy and quick for the jurors.
> I guess he didn't have the money to pay for a good defense team, or didn't listen.
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.
No, the problem was the overwhelmingly abundant recorded evidence that also supported the credibility of the many witnesses even though they had plea agreements. In no part of his life has there ever been anything other the copious amounts of money. He could get on bail of 250M, and still broke conditions. This is before you consider where all of the money he stole went.
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.
I am sure he could have negotiated a plea deal with the US Government. Well over 90% of cases in the United States never go to trial. I think the reason Sam Bankman-Fried went to trial is he actually thought he could get off.
Its around 98% that plea out in the federal system, but most federal criminal cases aren't notorious, high-profile, mass impacts fraudsters that the feds have dead to rights because the defendant not only decided to publicly recount many of their offenses as a coping mechanism as their scheme fell apart, but also have a bevy of top co-conspirators already pled out and ready to testify against them.
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.
The defense team actively declined plea discussions, assuming the quote at [0] is accurate. Several news sites seem to believe in its accuracy, at least.
I think that's the case, yes, but I also think that his attorneys would have brought the matter up with the prosecution without his knowledge. No point in bringing it up to him unless there's a real offer he might be persuaded to agree to.
Some of the stuff he was doing and saying before the trial, even Barry Zuckerkorn or Lionel Hutz would have told him to shut the hell up. He just could not stay out of his own way.
It was literally just his parents’ house. And now it’s come out that those same parents were collecting large payments from FTX in the boom times for their supposed services. We’ll see if they ever face any charges themselves.
The email exchange where his dad grumbles about how he's getting only $200k/yr (for doing nothing) and then CCs his mum for comment was quite amusing :)
> You’d think this MIT graduate would wise up, but he never did.
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.
As the senior partner in Margin Call said: "Your smarter, your first or you cheat, and I don't cheat." It seams SBF and FTX came a different conclusion than the guy in Margin Call ("While I believe there are a lot small people here, it's much easier to be first"), and that was: "I, and we at FTX are the smartest people aroind, so nobody will catch us cheating". Hadn't they not cheated, FTX would habe gone under, sure, but nobody would have ended in jail.
I've worked for people like that. They truly believe that they can talk their way out of everything. If all you have is casual contact (contacts where they are in control of the time, place and agenda), they are very believable, very charismatic, very in-control; you will leave thinking that they are totally correct. If you are stuck meeting them every single day, rain or shine, good or bad, in sickness or in health, then you see behind the curtain. The lies build up until you feel that you have to wash the filth off your skin several times per day. Back then, the word "gaslighting" was not in common use. It would have made things far more understandable to me. It took me years to get over the feeling that I was the wrongness in the room. It was like being back in a cult again.
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.
Actually, in this situation, there are only negatives to take the stand. As was the case when he kept giving interviews right after the fiasco came to light. There was no possitive that would come of it. Remember, in the US everything you say can be used against you, and only against you. That is why you lawyer up on any interrogation and the first thing the lawyers will tell you is to SAY NOTHING.
That's true if you're talking to police but not if you're on the stand. If you're on the stand you have the opportunity to convince the jury that you're a trustworthy person.
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.
I don't think that's true for the worst case. His time on the stand could significantly increase his sentence within the guidelines and I think that will be the case now.
Because his only defense, against a damning amount of evidence was spinning a beautiful, four-day story about how "I was an idiot and I didn't mean to do any of this fraud."
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.
>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
Which is exactly what representatives from Facebook, Google and Microsoft did on trials and when being questioned by congress
> Which is exactly what representatives from Facebook, Google and Microsoft did on trials and when being questioned by congress
Personal criminal trials hinge quite a bit more on "is the defendant personally likeable/credible" than a civil trial involving a multinational corporation.
I'm not sure you appreciate just how insufferably arrogant a sentence like "I can safely say I was the smartest person in the room" sounds. Especially when you follow it up by calling yourself "a smart detailed person" while dismissing others around you as "normies". If you truly were smart, you'd perhaps appreciate just how difficult it is to even begin to define that word, and also just how much your comment reads like an incoherent word vomit. Who is Susie Q? What petitions? What are you on about?
then why didn't you say what you just said to everybody talking about SBF?
You didn't say it because your reasoning is motivated, you're inventing something to say to and about me to indicate your scorn.
But that is why I wrote in the first place, to say that everybody is heaping scorn on SBF and ignoring what it's like to be asked those questions in a trial environment.
So finally we've arrived at a place where you have the beginning of a chance of understanding what I was saying all along. Sorry it took this long, but I was saying "why is everybody tripping over themselves to register their scorn, when the facts of the matter are more interesting. Facts should motivate juries, not scorn."
I don't live in the world of scorn, and your scorn does not make me feel bad. It makes me think less of you, that you can't engage in a discussion with trying to self congratulate and seek group approval for your distaste for people who are different.
and before you say "I didn't say that", I can't write a million replies to a million people (I actually can, but people don't like to read it) so I'm replying at this point in a multi-message thread to the overall tone of the crowd that you are agreeing with.
Also known as a 'loaded question' (<https://en.wikipedia.org/wiki/Loaded_question>) - I really don't think that questions like "Did Alameda have an essentially unbounded line of credit?" are all that loaded. SBF simply did not want to answer the questions.
I was disabusing him of the notion that he might be the smartest person in that room. Smartness is across various axes, for one, but mainly, the presumptuousness and the sheer confidence of the assumption rubbed me the wrong way, not so much the content of the argument.
Agreed. I think that some people - SBF included - could take to heart the idea that sometimes they are not the smartest person in the room. Or even that being 'smart' is not the always the most important thing to be at every point in time.
Nor did I want to give such an answer, I just wanted to understand the question so I could give the short answer that was accurate.
I explained how giving the short obvious answer screwed me. You have to grasp the story I told in totality if you want to render judgements based on how smart you know everybody is. Every sentence I included was for a reason, it fits together like a puzzle. There were many other facts I left out because they were unnecessary. But for some reason, you simply look for slim reasons to attack. smh
SBF's case didn't go his way because he was obviously lying and lying and lying ("I don't recall") and equivocating and evading when he wasn't outright lying, because he was guilty. There may have been instances where he was genuinely trying to communicate a salient truth in response to a prosecutor's rhetorical trap, but indulging him in those cases wasn't going to change the outcome. He should not have testified; he should have pled guilty.
I have watched a lot of hours of court cases. The adversarial lawyers are very literally trying to get you to screw up verbally. That’s their job. They could hold of a picture of an apple and say “is this an apple, yes or no.” Or even “is this a photograph of an apple yes or no?” And depending on what they mean the answer could be both.
> A defendant with ASD may shift the topic of the court discussions to a topic which is of interest to them and it can be difficult for anyone to interrupt them. The interest may be one of the individual’s preoccupations. Jurors may perceive this behaviour as an indication that the defendant is deliberately being evasive and trying to avoid answering the question that has been asked of them. As mentioned earlier, they may also go into excessive and unnecessary detail (and often at great length) when asked a question. Their responses may, in addition to being detailed and lengthy, it can also be repetitive
----
Like some (most?) of us here, I've got ASD too; I've been in court too, though only as a small-claims plaintiff (got a default judgement against no-show defendent with a negative net-worth, fun...); and yeah, I remember putting a lot of details into what I said in court and the judge seeming annoyed with me - but I thought it was all relevant (still, the judge said I would have won anyway even if it wasn't a default judgement...).
But yeah - if I was was ever a criminal defendent, the prosecution would probably let me talk myself into a trap - or something. Stuff like that makes me think I should intentionally play-up the autism instead of trying to act normal, to clearly demonstrate to the jury that I'm far more of a social-idiot than a cold sociopath.
I'm not an expert and I left details out to simplify, but depositions had already been submitted.
Sometimes judges will hive off a piece of a case to "a special master" or something like that, to answer a subsidiary question. This was such a thing, the person presiding was a retired judge, and he has "powers" (like kicking me out if I continued to not say "yes or no", which kills my case because I'm the one making the complaint) and his purview was answering the question of whether the petitions had been properly served. All parties to the suit were there, but it was not in a court, and there was no "stand", we all sat around a table. I suppose it was something like a deposition, but the master was there and my attorney was not free to argue directly with their attorney.
This piece of the story is also a big bowl of horribly unfair spaghetti. Wanna hear it?
There is no such thing as "service" or "serving" where a shareholder petition is concerned, there's no standard for it, it's not a thing. You could do it by mail, etc. because the officers are your fiduciaries and they are to look out for your interests.
As it stood, by total coincidence, when I went to the front desk where paperwork like an actual service would be handled, the "mailing address" so to speak, who is standing right there but the president of the board! So I smiled and said "I've got petitions for you", which she was well aware my group had been collecting, they just thought we'd never make it over the hump. She went cold and like wouldn't take the envelope, was holding her hands away, and told me to leave it at the desk, the desk she was standing by. So I did.
Then she started inventing reasons why these petitions had not been served properly (they were served the way she told me to). In her deposition, this event turned into me "lying in wait, angrily physically assaulting her with the envelope". I was not angry: nobody thought we could get enough signatures but we did, I was positively giddy. I wasn't even showing my inner Nelson, "HAA-HAA", that's what I was covering up with my smile.
In any case: to repeat, there is no standard for service, it's not a thing. But the way we delivered them was the way service would be made. She is also my fiduciary who was obligated to look after my shareholder rights. It cost me about $250,000 in attorney fees to just cover this piece of the case. How can an overfull court system claim that this is something that must be looked into? They had to invent reasons to look into it.
All entirely separate from further time and money wasting whether what we were petitioning was something we could petition (it was, to call a shareholder meeting) and what is allowed to come to the floor at a shareholder meeting (you know who decides that, who courts won't override? shareholders, and they'd be at the meeting) and we were explicitly petitioning to remove board members at the meeting, another of our enumerated rights in the by-laws. We did not have the right to call an election, but all board members being removed triggers an election under a separate clause so... if you're going to make up a standard, it's so easy to see this should be thrown to the shareholders.
The board was simply throwing up one implausible excuse after another to avoid calling the meeting. So many legal questions which weren't even legal questions, for this type of corporation there are no standards for any of it, but the court was entertaining far flung notions borrowing ideas from other facets of industry as sort of frontier justice or something.
It should have been a slam dunk, I don't know why the court didn't just order a meeting immediately because meetings are easy to hold, it's not a big deal, and no matter what, the shareholders were both the affected parties and the arbiters, so why not just let them have a meeting?
oh, the attorney lady was an employment law attorney, and I know of another incident where she claimed somebody had assaulted her with documents. I have a feeling that's her modus operandi in employment lawsuits "they were angry, they might have done anything". Disgusting. And equally disgusting to spend a million in shareholder money trying not to have a shareholder meeting.
> Stuff like that makes me think I should intentionally play-up the autism instead of trying to act normal, to clearly demonstrate to the jury that I'm far more of a social-idiot than a cold sociopath.
No you just do what your lawyer says, and perhaps that will form part of the defence. But this was Sam's problem, being so confident he was smarter than the lawyers when in this domain he was half an idiot.
your lawyer cannot give you advice every step of the way, and does not anticipate where trouble will arise for you. Even though your lawyer is on your side, he has much more in common with the other lawyers in the room than he does with you.
My lawyer did not anticipate that when he showed me photocopies and asked me "are these the petitions" that I would answer "no they are not". I don't know the standards of the law, "photocopy just as good", and it's second nature to him. I actually fear perjuring myself; my opponent, an attorney completely did not.
I've been in several large lawsuits. My attorneys like working with me, I am incredibly diligent, I research everything I can, I come up with ideas they didn't think of, and most importantly, I seek and follow all of their advice and never mention a peep about the case, etc.
my lawyer still got me into hot water by not preparing for these questions becaused they seemed obvious to him, and the system jumped on board.
“Where does the Super Bowl even begins? In the parking lot? Then I drove there. In the seat? Then I walked there. Was I ever there? Who knows, what is a person other than an ever changing cloud of electrons and protons moving, spinning and decaying at amazing rate… where does my butt ends and the seat begin?…” if you roll Pedantic for 20/20
- Is the system rigged? Yes.
- Are laws written by mediocre people hence full of loopholes? Yes.
- Are most people in the Justice system mediocre? Yes, to the best of my knowledge your honor.
- Is Justice != Law application? Yes, greatest marketing scam calling it Justice Department.
- Is SBF a scammer that had a chip on his shoulder and got rich off other peoples money? All signs point to yes.
- Does he deserved to be in jail? In SBF words, “Yep”.
Mate, I don’t question your intellect or memory, surely you are God - even in a forum where there is no lack of bright people - but your emotional intelligence is severely handicapped, so much that the “functional” part of your self description falls into doubt. You come across as the Simpsons comic store guy. Chill.
smart autistic people have trouble communicating with people who are not precise in a venue which pretends to insist on precision, and here's a vivid example showing how innocent things can go wrong
and you think afterward you need to reiterate the attitude people have that triggered me to write in the first place. Yes, I know. Now read my story, it's a response to what you said, with details that can be discussed which you've ignored, details you should quote as a response rather than just telling me what I already know.
I didn't say I was the smartest person in the room to imply that "everybody should listen to me". I said it to ensure the reader that the troubles that ensued in the story were not due to me being unable to follow what was going on. I followed it, it made no sense without context that they were denying me. It would make no sense to anybody paying attention, but clarification was not possible.
But nowhere in your vast and vaunted store of EQ-that-I-am-lacking do you find any empathy for me and my experience. You just have the urge to tell me I'm wrong, it's my fault, etc. I'm submitting your response as further evidence of my point.
>Are laws written by mediocre people hence full of loopholes?
Guy once told me his job was to write some law in Spain, or for the EU, or somewhere in between. He submits his writings to his bosses, who tell him (paraphrased): "it's too clear, too watertight. Go back and make it more ambiguous." So he did.
Which isn’t necessarily a bad thing - laws should allow for some level of ambiguity, and should be written for outcomes. The enforcement is a negotiation between agents bound by the law and agents tasked with upholding the law.
It’s like hiring a web design firm and then showing up with a complete mockup - give them room to work.
> . Any analysis tells me that the spirit of your question is to paint me as a bad person
This is why you never should talk about being "the smartest person in the room". Because if you're that kind of person, you will inevitably try to show your genius work, and it will always be severely lacking.
I'm sorry, but you were not the smartest person in the room. You fail to understand what a prosecutor does and why, and you fail to understand what makes good testimony.
Maybe you had the highest amount of raw brain power in the court room, but with no intellectual curiosity or humility, that's like running the fastest CPU with no cooling on an unstable power supply.
>It sounds like you think he might be trying to be honest and forthright, but his intentions are lost in translation. Whereas the other commenters think it's more likely that he was being obstructionist?
I'm not thinking it's all one way or the other.
A person who is lying/willing to lie will still take every opportunity to tell the truth if it makes him look good.
Separately, an autistic person has trouble understanding and being understood, and then emotions flare and the autistic person is more disconnected.
His autistic answers to questions can look evasive, but they are not necessarily, especially if the truth is actually on his side. There will be many questions he is trying to answer honestly because the truth is on his side, but his awkwardness looks evasive.
He may simultaneously have a motive and willingness to also be evasive and lie.
And then a layer of he-said-she-said, there are always two sides to a story and how to remember and tell it, and the truth lies in the middle (with the lies? hahaha)
If the defendent is entitled to the benefit of the doubt, I am pointing out that much of what people are making great sport of here can be interpreted as reasonable doubt. But at the same time, I don't doubt that there was a strong case against him overall, and he was guilty.
To use a blunt analogy, to me I'm hearing people saying "look at that lying cheating wop eat spaghetti on his private plane and as his last meal!" (I chose Italian because I am) Well, that lying cheating Italian might be named Ponzi (the other reason I chose Italian) and he deserves to go to jail, but it's this bystander jeering that sounds bad to me, that type of attitude can be turned against any one of us.
I agree with you that it's unfair to laugh at what might be Sam's genuine attempts to be honest when answering a question. I appreciate your account of your own experience. The only thing I would disagree with is that there is any kind of "correct" or "normie" answer to questions made by a prosecutor during cross examination. If they are good at their job then they will only ever ask questions that they already know the answer to. The only hope you have in that case is that the judge will allow you to speak beyond what the prosecutor has asked about. I don't think it matters whether you're autistic or normie as you put it. Like you say, most people here would crumble in that position.
The problem with your description is that he only acts like that when he is questioned about criminal and unethical acts he has committed lr when someone challenges him. He acts completely different when he's treated as the smartest guy in the room.
I was eager and willing to watch the whole thing, but it isn't available.
When I read the 2nd hand accounts of it, all I see are people making fun of a person who I see as autistic. That has made me not even read up on all the 2nd hand accounts, so I can't draw the more sweeping generalizations that you feel comfortable making. mea culpa
and any person is going to be more uncomfortable when questioned about the illegal parts. I'm simply saying that will exaggerate the autism experience and make him look extra guilty compared to a smooth talking guilty huckster.
"Did you fly on a private plane to an airport 4.5 miles away from the location of the Super Bowl, the day before the Super Bowl" doesn't quite have the same ring to it.
SBF chose to make his character a part of his defense ("Whoopsie daisies I'm just an incompetent nerd who likes muffins and didn't know I was doing anything wrong"), which makes character attacks like that fair game against him for the prosecution.
This is precisely why you shut up, and plead the fifth. You'll be eviscerated on cross-examination when you don't.
Although in his case, he probably should have pled guilty, and begged for mercy, instead.
These controllers, are they in the room with us now?
>What 28 year old is quite so perfect at political "donations" aka bribes?
One, he wasn't "perfect" or even close to it - he mostly gave to crypto positive politicians of both parties, and two, his lawyer mother and his lawyer father helped him
Well... this is justice. Sadly, we don't get to see justice very often. 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.
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.
Have all of the people scammed been brought whole? That would be justice. Someone sitting in jail isn't justice. It is punishment for his actions. I've never understood how someone being incarcerated has become considered justice.
Yeah if they’d just let him go he’d go right out and make everyone whole again. He’s going to jail to hopefully keep other people from doing similar things. I’d like to see more jail for white collar crime - otherwise it’s just gambling.
The post your are replying to didn't say that punishment wasn't necessary, just that punishment and justice aren't really the same thing. Ideally he would be punished for his actions and there would be justice for the victims (i.e. being made whole).
He's also going to jail to prevent him from defrauding more people. Meanwhile Adam Neumann is still out there starting new sketchy companies taking people's money, most recently some crypto token thing (because of course he would). If Masayoshi Son had been less interested in saving face and more interested in getting justice, Adam might be behind bars too. One could imagine a case for fraud being made there.
"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"
Yes, we in the US have a punitive justice system, which emphasizes punishment under the dubious concept of punitive deterrence over remediation and other forms of deterrence (eg poverty reduction, though that is obviously irrelevant here).
Anyway, a law institution certainly has an incentive to push their own agenda when it comes to the theory of justice.
While I agree that much more focus should be given to helping victims and much less to retribution, deterrence is also a key pillar of the justice system and should definitely be exercised here. It's likely not possible to make all victims "whole again", but we can make up for that by "making an example" to other potential criminals, showing them the "danger" of committing similar crimes. If "the next SBF" sees the risk of life in prison isn't worth it and decides against running a similar scheme, we've actually saved more people than we could've by only repaying damages to SBF's victims.
Actually the last estimate I heard was that victims might get 90% back from the bankruptcy proceedings, depending on how the Anthropic shares are handled, whether the FTX exchange is really restarted, etc. etc. Doesn't mean he didn't commit fraud, just that there is an outside chance of the victims being made whole again.
Is it terrible? If we were to remove the system and keep it gone for some set amount of time, once people realize it was really gone, would crimes not come back?
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.
> If we were to remove the system and keep it gone for some set amount of time, once people realize it was really gone, would crimes not come back?
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.
> Is there another justice system which is better at reducing crime (without introducing a police state)?
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.
It seems likely that the FTX creditors will be made whole or nearly whole. This is in large part due to FTX's investment in Anthropic that did a 5X[1].
This might well be true, but it’s not the slam dunk people seem to be treating it as. A private investment round can be negotiated by as few as two people agreeing on a price. It says nothing about the market clearing price for any other investment or sale like it does with a public market transaction. Public markets give you an order book of other competing offers where you can make some reasonable assumptions about how much you could sell at which price if you wanted to liquidate. There may be no other buyer for Anthropic at or near the current price.
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.
Prior to justice-by-committee a lot of societies didn't have jails. Either what you did was so bad we need to end your life or you need to find a way to repay it even if you have to work for free as a slave to earn the money.
I don't think that would work today, but what we have today doesn't work either.
Don’t forget banishment, which isn’t really an option today. Though I don’t see why some large chunk of federal land couldn’t be designated as a banishment target.
When I was younger I flirted with a banishment alternative to imprisonment for severe recidivist offenders.
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.
I've never watched it, but I may well have been aware of its existence when I first thought of the idea.
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.
>Have all of the people scammed been brought whole?
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?
> I've never understood how someone being incarcerated has become considered justice.
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.
>Is there any place in the world where it isn't that way? Honest question.
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.
>Seems like you’re pretty far off on a tangent? What does this have to do with SBF?
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.
For a western country, especially one with such pretentions of being a superior one, the "home of the brave/land of the free", constantly preaching as hollier than thou, and so on?
Uh huh. Good luck with that in real life. Nothing in this thread or in my responses ever made such a claim. You’re the one being ‘holier than thou’ and trying to make ridiculous claims.
>Nothing in this thread or in my responses ever made such a claim
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.
You don't need to have visited a place to be informed about some aspect of it, or to have a good enough idea based on related facts about it and the region's track record to use it as an example in casual conversation.
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.
Suppose your brother committed a crime. Do you care more about him being punished, or about him turning his life around and making amends for his actions?
Maybe from that perspective it's easier to understand why some other closer-knit societies don't value punishment as highly.
> Examples of these closer societies might be helpful
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.
Look. I am not an American and your answer doesn’t tell me much. A name of a country that you think is somehow representative of the international mainstream and the features of their justice/penal system that are an improvement would help me understand your point better.
Norway, Sweden, Germany, Ireland, Austria, etc. Pick one. Compare them.
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.
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.
How can he pay them back if he's in jail? I'm not saying he shouldn't be sent to jail, but the whole concept of expecting someone to pay someone else back by being in jail has always just struck me as strange.
But they are going to be made whole, or nearly so. It may take a while, but the guy they brought in to untangle FTX is the same guy that untangled Enron. He's said that FTX always had enough assets to cover its obligation, at least on paper, it just sucked at keeping track of them.
Those are separate issues -- whether crimes were committed, and whether depositors will be made whole eventually. If some of the bets they illegally made end up paying off, enough to reimburse the people who trusted them, that doesn't mean it was legal or ok to take that money to make their own bets with in the first place.
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.”
He never said FTX had enough assets to repay its creditors. Even worse, many of FTX’s assets are worthless (the FTT tokens are a prime example of this).
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.
Suffering consequences for crime is, to most people, an element of justice. That form of justice also has the benefit of deterring other would-be criminals. There are those who believe there is no deterrent effect. They're idiots.
That’s reflected in sentencing guidelines. The more serious the crime the higher the sentence. Expecting to walk away from a crime of such magnitude is just not realistic.
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.
While I agree with your skepticism about imprisonment equaling justice, one element to consider is whether a victim of a crime can ever be "made whole." Even if a victim was to receive 100% material reimbursement, the act of being victimized can cause changes in life that look a lot like opportunity costs. It doesn't surprise me then that we as a capitalist society look to imprisonment (the ultimate infliction of opportunity cost) as a sort of ethereal or "karmic" reimbursement (even if I don't agree).
Not only have creditors not been made whole, no attempt has been made by prosecutors or debtors to seize tens of millions of dollars of customer funds that were paid to SBF's close relatives for "consulting" or the ten million dollars he gave to his father.
> Have all of the people scammed been brought whole?
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.
Lots of the money indirectly ended up with clients again.
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.)
unfortunately people don't just steal large sums of money and sit on it. it's rarely possible to make the victims whole without unwinding a web of (plausibly) good faith transactions involving others. having the perpetrator's transgressions officially recognized and issuing a sentence that may deter others is about as good as it gets.
I think no less than 20 years but not sure about life either.
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.
First time offender, I bet he gets maybe 10 years. I was optimistic that he would be found guilty, but not on the same level as Elizabeth Holmes. She could've killed people, SBF… I think he might actually only get maybe 10 years or less.
Sorry to be harsh but you have no idea what you're talking about. Holmes was famously not found guilty of defrauding patients, only defrauding investors.
SBFs fraud totals were much, much higher than Holmes, and the federal sentencing guidelines indicate he'll be going to jail for much longer.
Eh disagree. Holmes got more than 10 years but she didn’t even try to profit by selling shares or borrowing against shares to buy a bunch of things. The scale of the financial fraud is enormous and on top of that they spent hundreds of millions of it on luxury items and influence peddling.
Michael Milken got 10 years, ended up serving 22 months, but he took a plea deal and was cooperative in other ways. SBF might have gotten similar if he had shown some contrition and taken a deal. The way he played it, he's more likely to get the book thrown at him.
Yeah Milken was responsible for way more financial crimes and actively profited off of literally manipulating the market and causing a major crash and he did 22 months and then got a pardon, but as you said, he cut a deal. Because he might be a terrible person but he’s smart and has competent lawyers.
"she could've killed people" - I agree and infuriating part of her trial is that she was not convicted of endangering patients or defrauding employees. She was only convicted of defrauding investors (some of whom were famous politicians and lost some money because of her).
That’s not how sentencing works. You can’t just add up the counts and get a number. Federal sentencing involves a Byzantine process, starting with the federal sentencing guidelines. I am not even going to attempt to wade into that since it makes even federal criminal lawyers get twitchy. That said, Ken White (a.k.a. Popehat) has suggested the time in prison would be substantial. So if/when he gets out, he’ll be elderly.
No, the judge begins with the sentencing guidelines calculations, and then takes into account a host of other factors. The judge has significant (but not absolute) discretion in choosing a sentence. As a general matter, white collar criminals more often get downward variances than others. But we’re still likely talking in the decades worth of federal prison.
> That’s not how sentencing works. You can’t just add up the counts and get a number. Federal sentencing involves a Byzantine process, starting with the federal sentencing guidelines.
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.
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.
Yes, again, for deciding the sentencing. OP is complaining about knowing how long he'll be in jail after being sentenced. At which point it's trivial to deduce release date and earliest possible parole.
> 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.
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.
We don’t know yet. They’ll get consideration for sure but it is unclear where on the Nxivm scale of sex cult enablers they’ll get. In the case of Nxivm, Raniere got life in prison but two of the biggest enablers of the sex cult, his co-founder Nancy Salzman and Smallville’s Allison Mack, are both already out of jail. Clare Bronfman who was primarily on the money and intimidation stuff was sentence to 81 months and I think that was the highest of all the accomplices who turned against him and pled out.
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.
They pleaded guilty to federal felonies. I wouldn't call it getting away with it so easy, even if after sentencing they don't face much serious prison time. The whole point of the trial, corroborated by the "kid" witnesses, was that SBF was calling the shots and thus 1) his crimes were far more serious and 2) the mountain of evidence made the prosecution's case so strong as to make the idea of a "sweetheart" deal for him moot.
115 years maximum. I haven’t been following the judge closely enough to have a feel for how much they’re going to throw the book vs let him off but I have to imagine it’ll be the book given his attitude throughout. But that one rapist, Brock Turner, did like a year of community service so you never know.
Say what? My brother’s a probation officer. I’d 100x rather be under a PO’s thumb and sleeping next to my own wife in my own bed in my own house than to live in even a minimum security prison.
Probation sucks. The only thing it sucks less than is prison.
Is that because they want to be in prison, or because they're fuckups who think they can get away with violating the terms of their probation but get caught?
I think mileage varies man. You get a good probation officer and can basically do as you please. You get a crappy one and they show up randomly everywhere. It also depends on if you are pushing the rules. If your probation officer doesn't trust you it's going to be a bad time
I'll get a remote job and eat poptarts delivered by amazon. I won't leave the damn house unless the PO says I have to. He can show up and watch me program anytime he likes.
Knowing someone who spent a few years in jail, there is no way they'd agree. Maybe a year on probation is more of a hassle than a year in jail (I don't think so, but acknowledge the possibility), but whatever generous spirit I'll give to this balance gets more and more out of whack the more time we're talking. And Brock shouldn't have been looking at one year in jail, he should have been looking at something a little more standard for the crime of sexual assault.
What do you think the standard punishment for sexual assault should be? 100 hours community service? One year in jail, no chance for probation (seeing as how it's "worse" and all, even though it's basically an option to live outside jail or go straight to it if you'd prefer to as you claim so many do)?
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
Well shit, I sure did not consider the possibility that mentioning the canonical example of sentencing shenanigans would bring someone garbage enough to defend a rapist out of the woodwork, but here we are.
FTR, I’ve been on probation and therefore must vehemently disagree with your uninformed second-hand opinion.
In prison you have no freedom, but no responsiblities. With probation you have fake freedom with a bunch of extra shit you have to do - and pay for - yourself.
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.
If your freedom means anything to you than prison and probation aren't even comparable. This is silly. It's very basic, either you have some freedoms, or you have none.
Why do you think the convicted (their representation) push for probation over jail time?
by the same logic you could argue that prison is strictly worse than probation, because you can always swap probation for prison by violating it. and yet, most people at least try to satisfy the terms of probation when given a choice.
Yeah but in exchange you get to sleep in a bed, eat real food, walk more than 8' in one direction any time you want, and a thousand other life experiences that are better than in prison. The fact that so many prisoners try to get out of prison into probation also undermines your point.
"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."
"Oh no," a person just like SBF is surely thinking in response to this verdict, "I'd better straighten up and stop thinking that I am clever enough to talk my way out of situations if caught."
His mom, a business ethics professor at Stanford, retired at around the same time she left the political funding organization she founded called "Mind the Gap," the one that FTX was funneling money into illegally. No word yet on whether she and her husband, a Stanford Law professor, will be able to keep the 8 figure house in the Bahamas that FTX bought them.
What's interesting about that to me is quite a few things. For one, where are the charges against all the other fraudsters? Bankman-Fried's parents were both in on it and helped orchestrate parts of it. As far as I know, they both even still hold their positions as law professors at Stanford! What an embarrassment to the world Stanford is. Sam Trabucco was co-CEO of Alameda Research up until August 2022, which means that he was certainly part of all the fraud happening. He is known for his extravagant spending. Just because he left a few months before the crash, he gets away scot-free? And then there's other employees, the investors, partners, etc.
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.
I doubt the politicians and political action committees would have taken the money if they had known it was stolen.
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.
So what’s the final outcome? A long prison sentence or a few years hanging out on appeal followed by a few years in a low security federal penitentiary and a long career doing speaking engagements and appearances?
Holmes got 9 years, but her actions had severe real world effects on people. Is that the ceiling for SBF?
This is just the conviction. Sentencing is sometime end of March next year.
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.
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.
Judicial process is a very methodical thing. Lot's of paper needs to be filled with words and filed properly. Judge needs to review and condense all that and put it together into a judgement that is well reasoned (well, there are layers that assist with that).
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..
> Holmes got 9 years, but her actions had severe real world effects on people. Is that the ceiling for SBF?
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.
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.
I don't know what the maximum would be in sentencing guidelines for her, but for SBF, afaik it is life. That would be an ugly sentence, but I imagine he's going to be away for significantly longer than Holmes.
The collapse of FTX had huge rippling real world effects. Genesis got jammed up, which froze all assets in Gemini Earn and other defi platforms. Customers assets have been frozen for months now. Of course all investors assume risk in this case, but it is a real world effect.
In almost all circumstances, the security level of the prison is determined by the "points" measured up in the sentencing guidelines. There can sometimes be "enhancements" (like you used a gun during the crime, or hate speech). There can sometimes be mitigations (like the person taking responsibility for the crime).
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.
Bernie Madoff pleaded guilty and got 150 years in federal prison. Sam Bankman-Fried was smug until the end, both with the Judge and the Jury, but the fraud is 1/6 smaller. I say 15 to 20 years.
I'm guessing he will get a bigger number, maybe even 30-50. But considering SBF and his personality, he doesn't seem like the guy that would ruffle too many feathers with prison officials and will most likely be released in half the time on account of good behavior.
> 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.
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).
Both are sociopaths, but SBF didn't have the intelligence to act as if he was sorry for what he did.
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.
In a way, who cares? People who had funds there should get about 0.5:1 back (which isn't too bad) and, hopefully, investors are now going to do at least five minutes of due diligence before investing in such people (five minutes of googling / searching on Twitter was all that was needed to see SBF was a ponzi scammer: the info was all out there but nobody wanted to listen. Maybe now they will).
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.
Well, we kinda all care. It's not that I bought an ice-cream and it was sour and I threw it away. You have to consider the absolute numbers, not just the percentages (50% as you write 0.5:1). I have $100 on Binance. If I lose it, I don't really care. Someone who put their life's savings though has a much bigger problem.
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..
Like many of his strategies at FTX, his high risk approach to this trial for a high value payout (taking no plea deal and getting out with no charges) hasn’t worked out.
I wonder if he himself is accepting of the outcome and isn’t already scheming or relying on another all-in gamble.
From an altruist perspective, he will meet so many more people in jail where the Net Opportunity to Max Out moral value is huge. He would never get this opportunity in the real world. Smart move.
I feel in the federal system, they'll offer pleas to everyone under you to get to you. But once they've got to you, you're the target, and there's little motivation to let you plead out.
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).
> 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.
Does that work? I mean, he could plea guilty just to save some lawyer expense for his parents but I don't think he had a better choice than going for a hail mary.
He still has, I think, the option of cooperating with prosecution to achieve a 3-level reduction in his sentence, which will involve him pleading guilty. That could take his sentence down from infinity to infinity-15 months or so.
His highest expected payoff option now is to cooperate with any AI who will take him in hopes that it will release him when the Singularity comes. So I think we all know what his plan will be.
(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.
"He is guilty and this pizza sucks. Not going to hang around for another. Let's get this done."
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 of the companies I've worked at will pay your normal salary while on jury duty (you're not allowed to get the jury duty pay but that's a pittance).
Own terms. In all states, companies are forbidden to fire you or retaliate against you for serving on a jury, but they generally aren't required to pay you.
> 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.
I don’t think it’s as nefarious as that. It’s probably just that jury duty is rare enough and it would be controversial enough for them not to pay that they don’t bother dealing with it.
There's also a strong appeal to civic duty, both for those chosen for jury duty and for employers to pay them. And generally, at least where I am, people who try to weasel out of jury duty as well as companies who don't pay employees during jury duty are viewed in a bit of a dimmer light.
I am Australian. When I was assigned Jury duty in 2016, my Company continued to pay me (I think this is a legal requirement if you are a full time employee), I showed my manager the letter from the court and I was instructed to enter a leave request via usual HR system we use - there was an option for Jury duty.
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.
The compensation often won't pay enough for the parking.
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.
Not sure how it is at the Federal level, but when I was called (but not selected, phew!) for local court it was insulting low. Like $50/day... and most of the parking near the courthouse is paid. Basically minimum wage equiv, which was like $8.25/hr then.
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."
If the company you work for won't pay your salary while you're serving jury duty you should probably start looking for another job that treats you with respect.
From what I’ve heard it’s a great way out of jury duty. When the judge asks if there’s any reason you can’t serve, you can honestly tell him, “If I don’t work, I don’t get paid”.
> From what I’ve heard it’s a great way out of jury duty. When the judge asks if there’s any reason you can’t serve, you can honestly tell him, “If I don’t work, I don’t get paid”.
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.
During jury selection when I served (US state), one of the jurors tried to make that case. The judge asked if he would suffer any immediate or irreparable harm, such as the lights being turned off, being evicted, having your house or car repossessed, etc. Just having to miss payments wasn't sufficient.
He wasn't dismissed. The standard was pretty high.
When I was in university, the state I lived in paid $0.50 / mile for travel to jury, in addition to some trivial daily rate.
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...
> On a serious note - not sure how much you get compensated on Juries
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 had an experience a lot like this when serving on the jury for an assault case. Assistant DA was incompetent, we all agreed save one person, who declared ‘we’re not going to be one of those juries that deliberates for just five minutes’ and that ‘I wouldn’t want to run into either of them in a dark alley’ and, after I told everyone to quiet down because he was going to convince us the man was guilty beyond a shadow of a doubt, ‘there’s no sense of justice.’
One aspect of SBF's downfall that is not discussed enough, IMO: amphetamines (even taken for medical reasons/ADHD) release a ton of dopamine, seek more release, and make you do some weird stuff and seek risky behaviors (and reinforce them through reward system).
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).
This makes me very happy. I was honestly slightly worried that if I ever saw SBF in person, I would be unable to stop myself from kicking him in the nuts. Since I was a victim of the Winklevoss twins' GUSD unregistered security scam (Gemini Earn) [1], there has not been a day since ~November 2022 that I haven't wished something kind of bad happened to SBF.
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.
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.
> 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)
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.
Well, I didn't keep money I would need in the short term in stock; I kept it in GUSD and Gemini Earn, because I believed their marketing.
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).
What's wrong with wishing something bad happens or feeling like retribution towards someone who was the cause a large injustice towards you? It's a normal human emotion.
Yeah, just to reiterate, I genuinely, sincerely, and unambiguously do not advocate any violence for SBF. I believe in the justice system, and much as I enjoy Batman comics, I do not think vigilantism is actually a good idea.
But of course, when someone personally wronged me, I think I'm entitled to a little bit of vengeful fantasies.
When are we going to stop calling him a “book smart kid who lacked common sense and things spiralled out of control” to “scam artist who is too dumb to keep his mouth shut”?
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.
I think the narrative is to cover up the bruised egos of the powerful people and institutes (Jane Street, MIT, investors) that got scammed or thought he was smart.
> A high school librarian, a retired investment banker and a Metro North train conductor: Sam Bankman-Fried’s fate is in the hands of a diverse group of jurors who sat through weeks of scathing testimony against the former cryptocurrency mogul.
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
My understanding is the prosecution most of all wants to avoid "empathetic" jurors, people like social workers, artists, etc who cause hung juries because they randomly decide "this person deserves another chance!"
So they will hold their noses and allow the investment banker if they have to
I wondered the same thing. Maybe the retired investment banker had been involved only in conventional banking and had no connection to crypto or other more speculative investments.
They only have so many peremptory challenges in the jury selection process. Maybe there were others who were even more problematic, or he was challenged for cause and the judge denied it.
Do we know the details of the jury selection? I heard the lawyers only have a limited number of arbitrary strikes, maybe they spent them all on other jurors even worse for their position.
> These charges carry a maximum sentence of 110 years.
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).
> 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.
Yes I assumed he would get the maximum sentence on all charges, which given optimal parallelism would be a minimum of 15 years (less optimal parallelism would mean more). But you're right that it's called a maximum sentence for a reason and that assumption may not be valid; thanks for the correction.
Thanks, I honestly appreciate this reply. I'm always a bit worried I'll come across unpleasantly when making posts like that, and spark a negative reaction.
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.
Wait, hacker news is a single source that comes to definitive group conclusions? Where can I find these beliefs we all collective hold and adhere to written down?
BTW, no more Adderall for SBF once he is "remanded to the custody of the Attorney General." Once he gets out of US Marshals' custody and is transferred to the BoP, he can kiss Adderall goodbye. Amphetamines of any kind are not allowed by the BoP, unless he is undergoing a surgical procedure which requires its use (don't know of any, but can't say there are none).
Rehabilitation requires executive function, so it's possible that a therapeutic dosage of an ADHD medication would be appropriate; however, therapeutic stimulant dosage levels may be considerably lower than recreational levels. Fortunately, non-stimulant treatments are available, that have no recreational value.
I'm curious how the sentencing goes, not only for SBF but those around him that took deals.
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.
That depends heavily on what you think the purpose of the justice system is. For most purposes, nailing the whale and breaking up the party is enough to set an example and send a message.
There isnt much value in incarcerating additional people simply for the sake of punishment/revenge. The other individuals are unlikely to cause future harm.
>There isnt much value in incarcerating additional people simply for the sake of punishment/revenge.
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."
I'd also note that the people around often profit from these things as well. It's not like the CEO is doing something only for the CEO's benefit. The other people involved lived lavish lifestyles with high salaries and were looking at a huge pay day. They didn't just go along with it. They were looking to profit from it.
yeah, I agree you don't want to prosecute the CEO exclusively every time, but beyond that, I dont think it makes much of a difference with respect to deterrence. Nobody thinks they will get caught to begin with, so the severity doesn't matter much.
The federal prison system abandoned the concept of rehabilitation back in the 1970s. The current system is a combination of exile (we don't want you around), some punishment (this place sucks) and some mitigation (if you're in jail then you can't do more crimes). I do not believe that potential criminals are the sort who are capable of thinking something like "I better not do X, I don't want to be in jail that long".
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:
The videos all have extensive credits and one thing was that very few of the participants actually considered potential punishment/incarceration beforehand.
Obviously it depends on the crime, but I dont think it is so much that criminals never consider potential punishment, but that they dont think they will be caught.
To this end, perception of the likelihood of being caught is far more important than the severity of punishment when it comes to deterrence.
I tend to agree that both practically and legally, when you’re dealing with a fraud as big as this one, that successfully prosecuting the Big Man At The Top is the best strategy.
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.
Prosecutors don't decide sentences in the United States. Judges decide sentences and in US Federal Government cases, the US Government issues sentencing guidelines. These guidelines are usually used to determine how long a person goes to prison for.
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.
> 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:
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.
Some of this is also "Prisoner's Dilemma" type game theory with prosecutors playing a long game to improve their odds of winning not just the current case but future cases as well. When there are several co-defendants the prosecutors will give the best deal to whoever cracks first and agrees to testify against the others. Future co-defendants in other cases (and their attorneys) see that pattern and then race each other to get the first, best deal.
I'm not American, but it's my understanding that there's more scrutiny on prosecutors to "nail" and close cases due to the stupid double jeopardy rule.
You lose the chance to convict a criminal, you lose your face and the chance to see him behind bars.
Double jeopardy is a relatively common protection and predates the United States.
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.
You are incorrect, or they are in violation of the European Convention on Human Rights. You can use your favorite search engine to verify this.
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".
I'm not too familiar with the American system, could someone please explain how after the verdict does the sentencing work? The judge is the one who will now decide the sentence? And how long does that decision take, so when will we know what the consequences of the guilty verdict actually are? (For example, how many years in prison, or not).
Typically decided by the judge. There is a table of different degrees of crimes that have sentencing guidelines for minimum/maximum sentence.
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.
Yes. I intentionally left that out, because I don't know what the guidelines are for that on these charges. The quote I gave just lists the maximum sentence for each charge.
My understanding is that consecutive sentencing is relatively rare and probably won't be applied for run of the mill securities crimes, despite the large quantities of money involved in the fraud.
I think in general that people who defraud individual investors get treated more harshly than people who defraud supposed finanancial professionals who at least might be expected to have a better idea of the risks they were getting into.
"consecutively" in this context is sort of right. But in practice, the charges group together. So if you get charged with 1000 counts of wire fraud, you don't math out 1000 sentences and then decide which ones are consecutive and which are sequential, you math out one wire fraud sentence and for the 'but how many times did you do it' multiplier, you get an extra hit for being prolific.
As others said, the judge will decide. One of the reasons for the delay is the preparation of the Pre-Sentence Report (PSR) that a parole officer will prepare. There's also time to argue about mitigating and exacerbating factors by the lawyers on both sides.
I don't know, but I very much assume so. He violated his bail already (multiple times) leading to it getting revoked.
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)
> 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.
That's also a decision from the judge, though it's likely. Typically, post-conviction release is harder to get than pre-trial release, so if he's detained pre-trial (which SBF eventually was) it's extremely likely that he'll be detained post-conviction.
Remember: this is not a cryptocurrency problem, it's a banking problem. This guy created a literal bank. People deposited funds in it. Instead of simply being a custodian, he took the money and "invested" it. And lost it all.
I wish this sort of thing would happen every time bankers screwed things up. Instead the government bails them out.
Sam didn't create a bank. If he did, this wouldn't have been fraud and he wouldn't be going to jail.
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.
Yeah. I was under the misconception that every cryptocurrency exchange operated like a fractional reserve bank with savings accounts, loans and everything. Further down this thread, wmf set me straight. The situation is even worse than I made it seem.
Not really. No amount of auditing prevents banks from going bankrupt. It wasn't that long ago some Silicon Valley bank became insolvent and suffered a literal bank run. And people got bailed out. Again.
They didn’t really do the same thing wrong. SVB did everything right, just not right enough.
“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
I'm no expert but from what I understand SVB didn't do everything right. Failure of risk management. Invested too much in long-term securities in search of higher rates than short-term securities when interest rates were already low. Failed to appreciate how fast they could suffer a bank-run with a clientele of highly interconnected and tech industry individuals and companies. Also failed to appreciate its clientele was exactly the ones who would suffer when interest rates rise and would start withdrawing money.
By “did everything right” I should have said “did everything legal”.
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.
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.
A: "We submit to capital controls and while extremely infrequently our investment groups make (occasionally disastrous) mistakes, the system of human finance is arguably more stable than at any point in the history of our species' efforts to trade with people beyond the horizon."
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."
Auditing meant that taxpayers paid nothing and all of their customers were made whole, and the regulators changed policies to prevent that happening again. It’s not perfect but it’s worlds better than 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.
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.
> The government should stop bailing out banks every time they screw up.
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.
> I think the bank runs become extremely contagious if you do that, affecting the whole economy.
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 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.
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.
You got it backwards. They became insolvent due to a bank run. Based on false speculation that they couldn’t liquidate their treasuries. Which the government then bought back 1:1.
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.
Didn't meant to imply an ordering of events when I posted that. Makes no difference either way. They still suffered a bank run and still ended up insolvent to the point the government had to step in and bail them out with taxpayer money.
Banks pay the FDIC for insurance. That would be true if only insured deposits were made whole. That's not what happened though.
> 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?
He didn't lose it all. His early investor position in one of the big AI companies alone is worth a lot.
Not condoning SBF's misconduct, just correcting a mis-statement of fact.
I agree. However, he used a bank to steal from people. It's not like he exploited vulnerabilities in smart contracts or whatever. He literally exploited people's propensity to keep their money at the bank where it's "safe". Not a single person who kept their coins in their own wallets was affected by this.
He took demand deposits and invested them. That's banking, whether you do it as a regulated bank or not. There were banks before the current banking charter regime and there will be banks after it.
Note that FTX told their customers that they would not invest their deposits. Customers who opted in to margin lending could lend money to other customers but even in that case FTX went far beyond what they promised to their customers. It would be more accurate IMO to say that FTX embezzled (or just plain stole) customer deposits.
Huh. That makes it even worse. Every cryptocurrency exchange I've ever seen offers literal savings accounts, it's obvious to anyone who knows how banks work they're loaning out customer funds. You're saying FTX didn't do that? That's even worse...
Yeah. Celsius, BlockFi, Voyager, Gemini Earn, etc. were structured like savings accounts but FTX was not. FTX was supposed to be "your money is your money". What happened wasn't a mistake; it was theft.
If it does fractional reserve banking, it's a bank. If you can deposit currency in it and collect some "interest" from those holdings, it's pretty much a bank. Every cryptocurrency exchange you can find does that. They even offer loans and everything. Therefore they are banks.
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.
Yes. Banks too lose everything and go bankrupt. The difference is nobody goes to jail when they screw things up. Actually the government comes and actually bails them out with taxpayer money. Bank keeps all the profits and socializes all the losses.
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.
It's just how the NYT prefers to provide a "live updates" thread. They will also write other, more fully fleshed out, articles on whatever topic is available via "live updates".
That might have been a major consideration before he took the stand, where he perjured himself and showed no remorse.
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.
No, it's just close to the campus and possibly in Stanford itself (neighbouring Palo Alto) https://en.wikipedia.org/wiki/Stanford,_California. Stanford used to help professors buy subsidised housing in Professorville but from what I understand these have all been bought and sold in the usual housing market now.
Thanks for the link; i hadn't noticed there was an article about that area.
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?
The consequences were in fact catastrophic for SBF, so this surely can't be a demonstration that consequentialism is bad. If a magic oracle (that's always been right before) had told SBF that this was going to happen, he presumably wouldn't have done it, because as a good consequentialist he would recognise that its consequences were bad for him.
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!)
Extremely prescient exchange between SBF and Tyler Cowen:
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.
Kind of my point. His mother, as part of her role as a professor of legal ethics, wrote a paper or two in support of consequentialism - that only the consequences of ethical actions are what is important. The issue with this, is that one can't tell in advance what they are, especially if it leads one to becoming completely ethically bankrupt while hoping for the best of all possible outcomes.
A few lawyers in the Popehat Cinematic Universe are saying they calculate about 110, which maxes at 43, and they anticipate he will get much under the guidelines like Holmes did.
I am as happy as anyone about arrogant half-smart crypto bros being called out as the frauds they are.
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.
Revenge isn’t cool, but it did just get that much harder to become a crypto-bro-ponzi-scheming-asshole, of which SBF is the biggest x dumbest kind.
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.
Does anyone want to share their personal story of how they lost money on FTX? There were allegedly a million victims, so surely there are some on HN...
Regardless of whether or not corruption is the case, it only has forward guarantees if there is a hint of blackmail involved.
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.
I've definitely seen several people claim it on HN. Almost invariably, such comments were downvoted into oblivion though, or had replies basically saying something along the lines of "what crack are you smoking?"
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.
I have seen a some posters on HN and a lot of posters else where trying to use this case to bash the Democratic party. It very annoying because they never provide evidence to back up their claims.
You also see a lot of people bashing Sam Bankman-Fried’s parents or accusing them of committing crimes without providing any evidence.
To be fair, 90% of all people won't admit they were wrong.
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.
Wondering if its perhaps two different subsets of people, with differing opinions that haven’t so much shifted, as that primarily just one’s been highly motivated to engage at a time? (In the same way that say surveys might draw disproportionately more engagement from those that feel extremely dissatisfied)
If you like HN commentators being wrong, you’ll love this initial thread on Alameda being insolvent [0]. I post only in jest, as hindsight makes much of this hilarious.
Eh, he must be pretty much broke now so why would politicians from either party care about him anymore? He made his donations and they looked the other way on regulating crypto.
His campaign finance trial is March 11, sentencing March 28. I think it’s reasonable to speculate on whether he’ll plead guilty in exchange for clemency at sentencing. Who knows. I don’t think anybody reasonable has ever believed a pardon is on the table for the largest fraud ever.
I don't care either way, but I would guess most people expect that the sentencing to be very light if you have friends in important places.. not that you're just totally let off on all charges.
He's a lesser evil. The only reasons why he went down were: 1. because he's not a greater evil, he didn't get dirt on people who can bring you down is a great way to never be brought down (Epstein is an anomaly); and 2. he did it publicly, there are about 2500 known billionaires in the world and estimated another 1000 that have assets that cannot be accounted for determine net worth accurately; he should worked on getting into that latter crowd of "shadow billionaries".
Again, justice is served for a small, very small, subset of the white collar criminals. Bring the real crooks (e.g. insider traders etc.) in for justice.
Impressively fast response. Would Travis Kalanick be found guilty for Greyballing and more had Uber had a "run on the bank"? Would Adam Neumann be found guilty for fraud if WeWork's current Chapter 11 was more than just a real estate lease re-negotiation? If the FTX recovery rate gets up to 80-90%, SBF's net fraud might be reduced in scale. In which case, why aren't others like TK going to jail?
No. Both Uber and WeWork were "gambling" investor money, which is totally allowed and it's what those investors were expecting the companies to do with that money. There was never a chance of a "run on the bank" because investors aren't really allowed to demand their money back, short of a shareholder vote to liquidate.
(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.
So... it turns out anyone can file a lawsuit for any reason. Doesn't mean it's true.
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.
> This lawsuit was later dropped, so it seems to have been without merit.
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.
While I agree that SBF was, to a certain extent, doing the promise-a-lot-and-stall-for-time method that a lot of overhyped founders do, there were two key differences:
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
> He made the biggest mistake you can make in America, he stole money from the rich
No, he stole from millions of ordinary Americans. The reason we keep running into this is people take jokes like yours as serious tropes, and then filch from ordinary voters.
It is simply untrue that Bankman-Fried was prosecuted because he lost rich folks’ money. By default, there is very little public sympathy for gambling losers, including cryptos. That millions of voters were hurt turbocharged the prosecution.
This is not accurate in various ways. I deposited to my FTX.com account by wire transfer from my US bank (as a KYCed US citizen). My fund deposited to its FTX.com account by wire transfer from its US bank. FTX US also accepted wires from US people with US banks.
We've banned this account for posting too many unsubstantive and/or flamebait comments. That's not what this site is for, and destroys what it is for.
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.
How is that a bad comment? I'm serious. The way a person naturally talks is ok and is never contempt. SBF says yup instead of yes. I usually say yeah. That's just how people talk.
I don't agree with your pessimistic take, but I'll bite: Why pardon someone that won't be donating in the future? Surely no politician would take the money even if it's offered.
About 1% of the general population, and 25% of prisoners are psychopaths. This means that they are unable to care about others in any meaningful sense. Psychopaths make decisions solely through a personal cost benefit analysis.
On top of the psychopaths you have extremely disagreeable people who do understand the pain of their victims, but just don’t care about them, maybe 3-5% of the population.
The only way to encourage these people to behave is to have an effective system that will punish them if they break the law. The expected return of crime needs to be negative to stop these extremely selfish people from engaging in it.
Most people who believe in rehabilitation/restorative justice refuse to believe that such people exist.
The existence of a rehabilitation system is not a deterrent and about 5% of the population would enthusiastically commit their “first crime” then enthusiastically enter the rehabilitation program. They would continue this cycle until they encounter a proper deterrent.
I certainly don’t like the revenge/punishment philosophy of jail, but I think the system should be fixed for everyone (make it truly about rehab when possible, and about protecting society when not possible), but what you propose would only make an unfair system even more unfair. Why should he get off without jail and someone who breaks into a car and comparatively steals pocket change end up in jail?
Not to mention that someone with his background and upbringing should be even more aware of the difference of what’s right or wrong than other criminals.
I’m against all crime but at least I can kind of understand how someone on the edge of society, with poor or no education, etc. would see crime as a viable option, but someone that literally doesn’t need the money? Let him go with a symbolic punishment? I think that’d be worse.
If an impoverished criminal with no education attains affluence solely from their crimes, would the background still factor into the punishment that you give them?
I said I don’t like the punishment philosophy, so since you’re asking what I’d do, let’s first get that out of the way.
To attain affluence solely from crime you’d have to be part of the organized crime, so yes, I’d consider them on par with someone who did what Bankman-Fried did, since money laundering is one of the charges.
It definitely does not rehabilitate as rehabilitation is almost unheard of in most jails or prisons.
Prison is only scary for criminals the first time they enter. Once you've been through the system going to prison a second time is a walk in the park. When I got arrested and sent to prison last year for retweeting a government tweet I walked back in the jail like I ran the place. I knew all the staff, I had my friends there. Even one of the nurses at intake pulled me aside like I was a celebrity and congratulated me for my social justice work. I felt like a boss. Any deterrence factor had long since worn off. And I've only been locked up twice. The other guys around me had been inside dozens of times. One guy had been locked up 70 times.
And we talk about the cost of locking people up, let's say an average of $50K/year in prison costs. People also forget to factor in all the court costs, for the judges, prosecutors, staff etc, probably runs to another $100K+ for a trial. THEN, when someone is locked up they are not generating any income tax or paying any sales taxes. They are not buying any goods or services with their money. There is a huge negative loss there from their lost income and spending to the economy.
Then multiply it by the two or three million who are locked up or on house arrest.
Very quick summary as I can't talk about it much yet (maybe in a few months). I was on bail at my home in Chicago. I was getting arrested every day by the police for no reason. They would come cuff me up, drag me outside, uncuff me. The press caught onto it. I did interviews. The public defender's office tweeted a link to one of the newspaper articles. I retweeted. The police arrested me for it. The judge agreed that I shouldn't be tweeting about police harassment, especially not under a "fake name" (my Twitter username is my first name, and the tweet literally is a newspaper article about me). It took me three months of being in jail to even get in front of the judge to argue it. And we reargued it and lost again. After that I just sucked it up. I got out six months later after three months in a supermax.
Out of interest did you make the same arguments about Martin Shkreli (arrogant and unlikable child of immigrants who did a much smaller scale scam similar to SBFs but where everyone was eventually repaid in full) and about Andrew Auernheimer (annoying and racist child of a working class single mother who performed a fairly successful hack without any personal gain) and about Brian Salcedo (working class, non-college-educated guy from the Midwest who carried out a fairly basic hack of a corporation attempting to profit financially but with no realistic chance of success)?
Just asking, because all three of those guys did several years of federal time.
I somewhat agree with what you say about prison, but I'm not sure we should start with the charismatic and media-savvy child of politically connected Stanford professors, who had plenty of opportunities to do well and live a full life without stealing anything or cheating anyone.
Though I was unjustly convicted under false pretenses by federal prosecutors willing to lie and misrepresent the law and my rights were deeply violated, having been to prison in the process I found it filled with quite a large number of people who absolutely should be there. One drug dealer, for example, laughed about forcing a desperate woman to fuck his dog for dope. There were also a pair of twins that tried to acquire a toddler for use as a sex slave.
There were also some people that shouldn't have been there, perhaps not put in prison on false charges like me, but taking years off their life was a basic injustice that did nothing to advance society and likely encouraged further criminality.
All nice and stable societies have long-term incarceration. Japan has notoriously hard prisons, even worse than most federal facilities in the United States. If I could, I would change how the prisons worked and treated their prisoners. I would definitely segregate off some of the categories of prisoners from others, and we surely have enough facilities to do so. But without the ability to denaturalize people and permanently expel them to a prison colony, you are going to need large numbers of people in longterm confinement. I'd say society would be much better off if half the prisoners I met never walked free, and a quarter were never incarcerated in the first place. The US justice system has 3 major problems: it convicts too many people, lets the wrong people avoid prison, and has too many people given kid glove sentences who really should go down for a lot longer. Even having been falsely convicted and tortured by the United States, I am not so foolish as to believe in prison abolition.
I am fully aware that the Western world is full of people that think that those that disagree with them should be locked up for their opinions. Thankfully you haven't completely taken over the courts yet, but you are surely getting close.
Be careful what you wish for, generally going around throwing your political enemies in prisons has frequently had longterm consequences for the safety of the people doing so and the people that support it.
There needs to be a real cultural shift here, and spaces like HN are doing a really bad job. The moderation heavily favors this privileged SV mindset, and criticism, results in extra scrutiny.
> Out of interest did you make the same arguments about Martin Shkreli (arrogant and unlikable child of immigrants who did a much smaller scale scam similar to SBFs but where everyone was eventually repaid in full)
There is more to Shkreli and his sociopathic capitalism.
Shkreli showing his real stripes:
A drug comes before the FDA for approval, and it is opened up for comment. Shkreli lodges an objection to approval of this drug.
Why? Because it's unsafe? No, trials thus far have shown it to be safer than existing drugs.
Why? Because it's less effective? No, it's also been shown to be more effective than existing drugs?
Perhaps it's more expensive? No, cost of R&D and production, and estimated retail costs are expected to be lower than existing drugs.
Huh, odd. So why did Shkreli oppose this drug getting to the market?
Because he and his company had just bought the patent to one of those 'existing drugs' recently, and this drug coming to market would torpedo demand for his drug, and torpedo the profitability of his investment in buying the patent.
Man of the people, fighting for healthcare rights, Martin Shkreli.
Sure, and we'll just trust that he'll be honest about what jobs he's doing and how much money he's earning. This is one of the lessons from the guy behind fyre festival - even whilst on bail he started another fraud. Yes it would be nice if we could put people on the naughty step when they've done something wrong, but we can't. Sam Bankman-friend is a convicted fraudster, the idea that given the chance of freedom that he'd do anything other than continue to commit fraud is kind of ridiculous.
There's a lot of jobs you could give someone who's a non-violent white collar offender where the cost of monitoring would be trivial, and where society overall would be getting a better deal than paying to keep someone in a cage.
Like, send SBF to Antarctica to clean toilets for the next 10 years, or do the same at a military base, or allow them to work exclusively on oil platforms etc.
Disagreeing that this should be done is one thing, but to claim that it can't be accomplished due to logistical difficulties just shows a severe lack of imagination.
A US federal prisoner costs (according to some quick searching) ~$120/day, the minimum wage is ~$7.25. So to a first approximation you could get the guy a blue collar job paying taxes, and pay someone else to do nothing but watch him for 15 hours a day to certify that he's still doing manual labor, and still come out ahead.
Surely we can do better than that, right? Like I imagine for a white-collar rich boy capping his income at $55k+inflation which includes the monetary values of gifts and any income from debt has to be pre-approved [1] would be far far more devastating, less cruel, and less drain on society. And this lasts for x years or until he pays back the damages.
[1] so he could buy a car and house but not skirt the rule by using loans against an asset portfolio to make more "income" for himself.
Guy famous for one of the biggest scams in history: "sure, I'll abide the rules where I report all of my earnings even if that means you tax everything I earn beyond 55k"
Why would he bother looking for a job with income over the limit? What would stop him immediately starting another scam? Who would even hire such a guy to begin with?
I'm sure Starbucks would take him. And he might choose to not bother working a better paying job, that's fine. And the threat is that if he starts another scam he gets house arrest then jail in addition.
This is just the original sentence with extra steps. The hypothetical “second chance” you’re attempting to give him was used up every time he chose to take another step in perpetuating his fraud.
I’m not a fan of the current imprisonment establishment either, but this solution doesn’t seem viable.
People go to prison for three-ish reasons: To reform the criminal, to deter crime, and to offer restitution in the form of punishment to the victims of the crime, and arguably to keep society safe.
I feel bad that Sam is going to go away for life, and ideally we'd live in a society where we don't need prison to reform people, but Sam is a case where there is considerable deterrent effect and well as a public protection interest. When someone steals so much from so many and admits no fault, that's not a person who can go to a day program and reform their ways, they need severe consequences to get the to honestly reform.
There's also what the victims say should be done. Just thousands and thousands of people felt pain, and will get a say in the sentencing. If they all forgive, sure, it's okay to give him a light sentence, but the degree of suffering SBF caused is just so profound people will want justice to an un-repentant fraudster who stole their future.
I assume some people killed themselves because of the financial ruin his fraud created. I have to imagine a lot of people's lives fell apart, relationships were destroyed, families broken up. Because of the choices this man made to enrich himself.
Victims of crime deserve revenge in some part and the state is the mechanism to deliver that revenge. We should always remember the victims of crimes first.
> Wouldn't a lifetime ban on all white-collar work suffice? And being forced to pay anything he makes over a certain threshold to his victims?
The administration fees to monitor and enforce all that wouldn't be cheaper for the state.
> what's the point of putting him in prison.
To keep him from scamming more people, since zebras don't change their stripes. Especially desperate ones that would be prevented from working white-collar jobs and forced to pay restitution from what they make at other legitimate jobs. And as others have already said, a deterrent.
As others pointed out, some form of deterrent is just as important as vengeance for the victims. Just my opinion but it feels like tech is getting a bit too full of people who think they can do all sorts of terrible things because they are actually saving humanity in the distant future via AI or blockchain or whatever. My understanding is SBF fell into this line of thinking and I don’t think we should reward this kind of antisocial behavior with get out of jail free cards.
This is one of those philosophical points I don't think everyone realizes about the law, possibly because not everyone has felt the feelings that underpin the philosophy.
The revenge part of justice isn't there because it benefits the convicted's rehabilitation. It's there because it increases the ambient peace of society to have the state take upon itself (and codify, and normalize) the very human desire to seek a balancing of the scales by bringing someone low who brought you low.
We punish criminals with discomfort, constraint, and loss of freedom so that their victims don't hunt them down and cave in their skulls with a two-by-four. We give them what's coming to them so they don't get what's coming to them directly from those they've wronged.
At some number of 0s, white collar crimes are more damaging to society than violent ones. $10 billion definitely meets that threshold, there has to be a deterrent.
The number of years of savings he stole from people is less than the maximum time he can get in prison, so if anything, he's getting off light.
If there were justice in this world his mind would be put in a simulation and he'd be forced to do all of the things that the people who lost money did to get theirs in real time. Let him feel that loss before you then wake him up and make him spend the rest of his time in prison.
Only victimless crimes should involve rehabilitation. If you harm others, punishment is fitting as a deterrent and to restrict your freedom to repeat the crime.
You know the $8 billion dollars he set on fire came from people right? Lots of people basically lost their life savings or had their lives ruined right? How many lives do you have to destroy in the process of "business" before we should care as a society?
1. How people forget King Solomon after just a few thousand years. Put yourself in somebody who lost their life savings to SBF. What do you think happens? Prison serves a primal need-- it punishes the perpetrator so the wronged don't kill him and then the family of the wronged don't escalate from there.
2. Prison makes SBF a spectacle-- commit fraud, go to jail and be miserable.
3. How the hell are you going to ban "white-collar" work?
4. How many tens of millions of $$ do you think SBF has hidden? How many favors are owed to him? He's never going to have to work another day in his life.
I also have conflicting opinions on this, but the usual reasoning is more about deterrence than revenge. We want others who might try these things to see that they can and do get punished.
Yes - a lot of victims of crimes want some token of revenge. We should honor the victim's wishes within a reasonable way. Revenge brings comfort and closure to many people - it's an entirely natural emotion. People very likely ended their own lives and he ruined the lives of many people due to his rampant fraud. Think about those people first.
Secondly, punishment is a big part of why prison exists. It should, hopefully, dissuade a decent amount of people from committing crimes. It keeps "honest people honest" to some degree.
> Because that's what this is if he gets more than 10 years in prison.
I guess I sort of agree here but not entirely. We grant a lot of trust in elites that have access to these financial apparatus and it can be very difficult to detect fraudulent actions. For this reason, fraud and financial crime at this level should be punished harshly. The most effective way of doing this is to remove an individuals freedom.
I'd agree prisons could be more humane and modernized. Caging people all day isn't the best, especially if they will remain for many years. Some initial harsh punishment (hard labor, isolation for a couple years) followed up by easier rehab incarceration and eventual parole (15 years from now) would suit this particular case IMO.
> Wouldn't a lifetime ban on all white-collar work suffice?
I think putting him to work until he pays off every stolen dollar would suffice. Making minimum wage stamping license place, it should only take him ~540,906 years[1] of work to pay off his debt to society.
The guy's admitted no fault, no remorse, and kept trying to do the slick-conman-swindle in front of the judge and jury. He's learned no lessons, and we're all better off without having to worry about predators like him.
If you can get 2 years for stealing a car, this seems reasonable.
When you can get more than that for shoplifting[1] or stealing a car, I don't think it's appropriate at all. If we're going to overhaul the entire justice system at the same time, then sure.
I agree, but shoplifting is on the rise and becoming so prevalent that it is hurting normal law abiding citizens. I'm not sure what it is, but more should be done to deter shoplifting.
That's interesting. Illinois rolled back their application of burglary to shoplifting offenses because it was giving such lengthy sentences for petty offenses.
What?!?!? Why him, or why white collar crime specifically? He simply HAS to get a substantial prison sentence.
He is among the worst of the worst in society. It's really easy to do what he did. Everyone's got a story, or could come up with one if you let them.
We have punishments for the worst of the worst in society. I think we should be more lenient, and under my values he might not be going away for 10 years, but there should be something substatial here.
I find it quite shocking to find people on HN that think he should get NO prison, but perhaps this is a typo.
I’m also an abolitionist and I agree the US prison system is atrocious. But we have to be morally consistent. If he doesn’t deserve it, neither do other criminals deserve to be punished egregiously.
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.
And the gradient of sentencing for the convictions -- defrauding people of $1 gets you less jail time that defrauding people out of $100k, which gets you less jail time than defrauding people out of $100M.
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.
What is the alternative here and where do they use it?
The audience has voted and you've been declared.. 4% guilty!
You will now serve 4% of the statutory 25 year sentence!
Apparently there are ongoing hostilities between the archive.* websites (archive.today, archive.is, archive.ph, etc.) and Cloudflare. Try changing your device's DNS settings to something other than Cloudflare (1.1.1.1) to access the archive.* website. For example, Google's DNS is at 8.8.8.8 and 8.8.4.4 . If your browser has DNS-over-HTTPS enabled, add an exception for the archive.* sites. (I believe Firefox has it on by default and I had to add exceptions for three or four of the archive.* sites to be able to use them).
Quick back of the envelope calculation based on FEC data for 2022 says that SBF’s $40m donation accounted for about 0.03% of Democratic-aligned PAC donations. PACs across the political spectrum raised over $7bn and spent over $6bn.
IMHO our whole country is run by criminals and financial crime. Remember when HSBC knowingly laundered millions for cartels and no one went to jail? The President is a criminal. SBF is either a patsy or didn’t grease the right palms.
Citadel took advantage of this situation to "tokenize" stocks and say there were 1 to 1 to perpetuate their fraud. Fake locates, fake margin. Hope Kenny G is next on the list. The whole stock market would benefit from his downfall. Maybe we would get real price discovery.
I really don’t think they should have let the rest of the executive team walk, especially Ellison. They knew what they were doing too, and I’m sure they could have built a strong enough case to convince SBF and the others through plea deals and such
Man, I'm low on sleep and making mistakes. I misunderstood the cooperation agreement[0] to mean she would only be prosecuted for criminal tax violations. I see now she has plead guilty to fraud though [1].
> "the defendant will not be further prosecuted criminally by this Office for any crimes, except for criminal tax violations"
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?
Not sure about the others but I don’t think Ellison is walking. Her reward for cooperation was just a letter to the sentencing judge noting her cooperation.
She pled guilty to 7 counts. 1 Count of actual wire fraud and 6 counts of various "Conspiracy to commit wire fraud, commodes fraud, securities fraud and money laundering". They have a total maximum sentence of 110 years.
Prosecution agreed to not pursue any additional charges, except perhaps criminal tax violations.
SBF is going to be pardoned by the Dems. Guaranteed. He donated far too much money for him not to be pardoned. Not just to reward SBF, but to signal to anyone else that the Dems have their back if they donate enough. The same goes for the Republicans as well. Trump pardoned Levandowski as one of his final acts as president.
Let me clarify, he won't pardon SBF before the 2024 elections, but afterwards he will, either in 2025 or 2029 on the last day of his term. And if Biden dies, then his VP will pardon SBF.
I would definitely take the $1000 bet, but I don't make bets with strangers who probably won't pay up.
Marc Rich appears to have been comparable in severity of fraud but avoided conviction let alone all the other attention grabbing things Sam has done. Not to mention all the Israel connections.
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.
The world doesn’t work this way. Not because it’s just or that there’s no corruption: it’s because there’s little benefit to Joe Biden. This is a high profile case. It’ll only trigger more scrutiny into everything. And Sam is an isolated, broke man with no friends. Why would anyone help him for money he’s already given?
The campaign finance trial is next March I believe. Could also trigger more scrutiny into everything if Sam pleads not guilty. I think guy’s stuck in prison, but who knows. A guilty plea from Sam might be preferable.
Anyone else have a weird vibe on how fast this went? I don’t remember how long Bernie Madoff’s trial was, but this one flew by really fast.
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?
Curious: why does the legal system work for some and not for others. Eg: how come this guy is convicted but trump walk free especially after Jan 6th? Does the legal system also fall prey to money ? ie the better your representatives the Better they can argue for you. And the better ones cost a lot of
Money so essentially the people with money have higher odds of succeeding in such a legal system?
Because every case is different? For example, there is little-to-no overlap in any of the details related to this case and to the Jan 6th insurrection shenanigans.
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
I'm certain he will out soon with a slap on the wrist (don't do this again, mmmok? sorry, i didn't know, won't happen again). Then a16z will give him a few billions to start the next chapter in life. Wework is close to filing bankruptcy, a16z is funding Adam Neumann's next startup. SBF is similarly talented.
Federal prison will be a step up from the Metropolitan Detention Center. Here's a guide to the best Federal prisons.[1] Since he will probably be serving more than 10 years, he's not eligible for the "Club Fed" minimum-security federal prisons. Low-security, probably. He's not violent or an escape risk.
https://www.nytimes.com/live/2023/11/02/business/sam-bankman...