[HN Gopher] SEC Charges Samuel Bankman-Fried with Defrauding Inv...
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SEC Charges Samuel Bankman-Fried with Defrauding Investors in FTX
[pdf]
Author : scrlk
Score : 408 points
Date : 2022-12-13 11:24 UTC (11 hours ago)
(HTM) web link (www.sec.gov)
(TXT) w3m dump (www.sec.gov)
| Sporktacular wrote:
| It's infuriating how incredulous he acts.
|
| It would be like giving a microphone to a nabbed thief who says
| 'I can understand why someone might construe breaking into a safe
| as a reason for concern. That's a reasonable criticism'.
|
| Oh, you think?
| ReptileMan wrote:
| And what about customers?
| kshacker wrote:
| There must be some other org for that such CFPB. SEC focuses on
| investors, no?
| ekpyrotic wrote:
| This might just be the 'first arrow' from the SEC with much more
| to be added down the track, but it's interesting to see that they
| have gone in heavily on defrauding equity investors in the FTX
| business -- rather than pulling the rug on customers.
|
| Either that's because it's easier for the SEC to prove, and get
| it to the point of demonstrating fraud? Or the US customers and
| the FTX US business were relatively untouched throughout this
| whole process, so there is less to go on for US customer fraud?
|
| Or, perhaps, this is just the first arrow to smoke out more data,
| informants, etc, with a strategic view to adding further
| allegations down the track?
| PaywallBuster wrote:
| probably because FTX.com wasn't supposed to be servicing US
| customers
|
| So US customers who may have used FTX.com were circumventing
| whatever minimal measures they had preventing them to
| signup/use the platform
| quanticle wrote:
| This might just be the 'first arrow' from the SEC with much
| more to be added down the track, but it's interesting
| to see that they have gone in heavily on defrauding
| equity investors in the FTX business -- rather than pulling
| the rug on customers.
|
| Isn't that the same approach that federal prosecutors took with
| Theranos as well? From what I understand, Elizabeth Holmes went
| to jail for defrauding her investors, not providing false test
| results to patients. I think the SEC's reasoning here is the
| same -- investor fraud is easier to prove, so hit the fraudster
| with that charge first.
| nnmg wrote:
| I think you're spot on, it is easier to prove (or prosecutors
| have more experience prosecuting) financial crimes. To give
| them credit-- they at least tried to get Holmes for
| defrauding patients too, but she was acquitted of those
| charges [0]. Her partner, Sunny Balwani, was convicted on all
| counts, including defrauding patients [1].
|
| [0]: https://en.wikipedia.org/wiki/Elizabeth_Holmes#U.S._v._H
| olme....
|
| [1]: https://en.wikipedia.org/wiki/Sunny_Balwani#United_State
| s_v....
| evancox100 wrote:
| It wasn't for lack of trying though, Holmes was charged with
| defrauding patients but acquitted on those counts. Only the
| investment fraud charges stuck.
| jcranmer wrote:
| It's also worth point out, if you're interested in seeing
| punitive justice, that you're going to steeper punishments
| for defrauding investors than patients. If Holmes were nailed
| on defrauding patients, that would add something like $100
| worth of fraud for sentencing guidelines, which is nothing.
| But an investor who was defrauded of $100 million... that's
| $100 million of fraud.
|
| You have to specifically prove every instance fraud in a
| criminal case, so harm that is spread very widely but very
| shallowly (millions of people who lost $10) doesn't scale up
| for a fraud case, but harm that is narrow but deep (an
| investor who lost millions) can be easily done.
| [deleted]
| black_13 wrote:
| pavlov wrote:
| It's sort of curious that this SEC action is to protect the
| venture capital investors like Sequoia who invested in FTX shares
| directly.
|
| If I were a retail investor who lost my savings in FTX, I might
| be feeling upset that the government is rushing to action in
| defense of billion-dollar funds whose own due diligence failed
| massively, while seemingly nothing is being done to help those
| who invested in crypto based on FTX's Super Bowl ads and
| celebrity endorsements...
|
| At the same time, I fully understand why it's like this. Because
| the VCs bought actual FTX shares, the SEC has a clear case of
| securities fraud. The law is pretty clear about what happens when
| you sell shares in your company and lie about it.
|
| In contrast, it's not really settled whether the little people
| who sent money to FTX in exchange for a crypto ledger entry were
| actually buying securities, commodities, custodial services, or
| something else -- maybe nothing at all. (The crypto guys love
| this ambiguity, of course! They've been lobbying for regulation
| that keeps crypto in a no-man's-land where tokens that look and
| work like securities would still be something else.)
|
| This seems to be the reason why the SEC doesn't have a clear-cut
| case to protect FTX customers, but does have a case to protect
| rich VC crypto-bro partners.
| adrr wrote:
| Pension funds are a large investor in VCs. Calpers has hundreds
| of millions of investment in sequoia and tiger global both
| invested in FTX.
| dwighttk wrote:
| DoJ also filed charges (I think the indictment is sealed)
| blanketlamp wrote:
| > This seems to be the reason why the SEC doesn't have a clear-
| cut case to protect FTX customers, but does have a case to
| protect rich VC crypto-bro partners.
|
| I mean, given that FTX.us was supposedly completely isolated
| from FTX.com isn't that true?
|
| Assuming (and I understand this is a big assumption) that SBF
| is correct that FTX.us deposits were completely isolated and US
| customers can be reimbursed in full, the only US citizens
| harmed by this would be Sequoia et al.
|
| Even if it turns out US customers are actually left holding the
| bag as well, does the SEC even have clear jurisdiction over FTX
| on that? Maybe? Wouldn't the DOJ criminal charges be much
| better wrt nailing him for that though?
|
| Seems _much_ easier for the SEC to charge him with defrauding
| investors, as that 's pretty much a slam dunk case at this
| point and also clearly the jurisdiction of the SEC.
|
| You can draw analogies here to Capone and tax fraud etc. etc.
| chewz wrote:
| Well, for start investors put in dollars while customers put in
| some funny coins... It is hard to defraud someone out of some
| made up money...
| dom96 wrote:
| I'm no lawyer, but to be fair it seems the SEC charges
| document[1] does allege that Sam Bankman-Fried defrauded FTX's
| customers too.
|
| 1 - https://www.sec.gov/litigation/complaints/2022/comp-
| pr2022-2...
| warinukraine wrote:
| > It's sort of curious that this SEC action is to protect the
| venture capital investors like Sequoia who invested in FTX
| shares directly.
|
| This action is to protect investors. No need to make it into a
| conspiracy.
| empathy_m wrote:
| It's possible that we will hear from individual investors at
| trial or sentencing. Even though the Theranos trial was about
| defrauding investors, there was still testimony from an actual
| customer. ("The first patient to take the stand in trial of
| former Theranos CEO Elizabeth Holmes said that the company's
| blood test inaccurately showed she was suffering a miscarriage
| when in fact she had a healthy pregnancy.")
| pcl wrote:
| I would expect that the bankruptcy proceedings and any future
| civil lawsuits are the main avenues for individuals to seek
| individual redress.
|
| If I were an individual, I wouldn't really care about _how_ the
| criminal charges were structured, since it's not like I would
| get any individual benefit out of his jail time, one way or the
| other.
| krisoft wrote:
| > If I were an individual, I wouldn't really care about how
| the criminal charges were structured
|
| Yes. But! As an individual I care if the laws protect me.
| Have they been clever enough to only scam people like me,
| would they still go to prison?
|
| As long as the answer to that is yes, I don't mind if
| something else they have done is easier to prosecute.
| 323 wrote:
| > _If I were a retail investor who lost my savings in FTX, I
| might be feeling upset that the government is rushing to action
| in defense_
|
| The customers will be paid before investors with whatever money
| is there. This is well established by previous case precedents,
| including in places like unregulated poker betting sites.
|
| Anybody can have a claim, including the SEC, but the courts
| decide allocation order.
| robocat wrote:
| > The customers will be paid before investors with whatever
| money is there.
|
| That really depends whether the investment is structured as a
| secured loan (senior debt) or not. Secured loans get paid out
| in full, before the unsecured creditors such as customers.
|
| > but the courts decide allocation order
|
| Mostly that is defined by the laws of the jurisdiction, not
| the individual court.
|
| In the Bahamas, the ranking of creditors and shareholders are
| as follows[1]: Creditors with a mortgage or
| fixed charge: assets secured in this way are outside the
| scope of the insolvency. Costs of insolvency
| proceedings: all costs and expenses properly incurred in the
| company's winding-up (including liquidator's fees).
| Employees' debts: sums due to employees under the terms of
| their employment contract. Preferential payments, such
| as unpaid taxes, contributions to occupational pension
| schemes and liability for compensation for injury or
| occupational disease. Creditors with a floating charge.
| Unsecured creditors. Shareholder loans.
| Shareholders' equity.
|
| In the US[2]: Under the Bankruptcy Code, the
| priority of allowed claims and interests is, in descending
| order: Secured claims. Administrative
| expenses and priority claims. General unsecured claims.
| Subordinated claims. Equity interests.
| Outside of bankruptcy, creditor ranking is determined by
| state law and in certain circumstances, the agreement of the
| parties, such as in an intercreditor agreement. In
| bankruptcy, the priority of creditors' claims and interests
| in a debtor's estate is set out in the Bankruptcy Code.
|
| VC early investments may be a convertible note, often senior
| debt that can be converted to equity in the next investment
| round[3].
|
| The costs of insolvency proceedings, or administrative costs,
| may be determined by the liquidator. The liquidator will
| generally milk the system (within their legal limitations) as
| much as possible (extremely high charge-out costs per hour,
| etcetera), so customers will often get didly squat. A senior
| liquidator might be charged out at say USD800 per hour, down
| to the secretary who might be charged out at USD120 per hour.
| The liquidator's goal is to charge as many hours as possible,
| without being so extreme that the court pulls them up on it,
| or to finish up quickly if there is no more money left to
| suck.
|
| [1] https://uk.practicallaw.thomsonreuters.com/9-518-5211
|
| [2] https://uk.practicallaw.thomsonreuters.com/7-501-6870
|
| [3] https://www.investopedia.com/terms/s/senior-convertible-
| note...
| xxpor wrote:
| Given FTX is in Chapter 15, would the US order apply?
| 323 wrote:
| You can claim customer money is secured claims.
|
| Like I said, IANAL, but in all the cases I'm aware of
| customers went first.
| blitzar wrote:
| Theranos and holmes ... convicted ONLY of defrauding VC
| investors. Not guilty of defrauding customers by faking medical
| tests etc.
| ethanbond wrote:
| Whoa, are you trying to tell me all the big fish hyping up the
| Regulators Are Evil Economy get near-total legal protection of
| a regulated market, but all the little people who got taken in
| by it are going to get screwed?
|
| An incredible and unforeseeable development!
|
| Surely there will be more charges over time but the end result
| isn't going to change much. The wealthy people who've been
| boosting all of this will take the smallest losses of all.
| [deleted]
| JackFr wrote:
| None of the big fish are getting money back. No one is going
| get money back. It's gone.
|
| At the same time, I have trouble finding sympathy for anyone
| involved. SBF is a sociopath, thief and liar.
|
| Those big-name investors should have known better and I'm
| sure in many cases they did. They probably should start
| lawyering up too, because they've got investors of their own
| who have been harmed either through malfeasance of actionable
| incompetence.
|
| And the 'small time' investors -- mom-and-pop, widows and
| orphans investing the life savings on the platform -- all
| crypto is a scam, a Ponzi scheme, at the very best it's a
| casino or playing the numbers. Always has been. Always will
| be. All they had to do was open their eyes or maintain
| critical thinking in the face of promoters trying to
| bamboozle them.
|
| And yet dumb money says I'm wrong. BTC up 4% on the day....
| ethanbond wrote:
| You don't need money going back for it to be the case that
| the big fish will be fine, have many avenues for recourse,
| and the small people will be completely and thoroughly
| burned.
| LarryMullins wrote:
| It is often the case that the victims of scammers were up
| to no good themselves, and allowed greed to cloud their
| judgement. People sign up for schemes that are _flagrantly_
| pyramid schemes, knowing it 's a pyramid scheme, because
| they think they'll be able to get in and get out before the
| pyramid collapses. This kind of behavior is the norm in the
| crypto currency scene.
|
| 8% APR from a crypto company was obviously a pyramid
| scheme. Anybody who put their money into FTX was either
| unbelievably stupid, or knew they were playing with fire
| and hoped _they_ wouldn 't be the ones to get burnt.
|
| If somehow all the money has been utterly destroyed so
| _nobody_ involved gets any of it, that would probably be
| the best outcome. If the cryptobro investors get their
| money back, they 're just going to use it in other scams to
| hurt more people.
| Sporktacular wrote:
| It wasn't a crypto investment for the mums and dads! That's
| the whole issue. They were treasuries - holdings that
| shouldn't have been at risk. SBF and his asshole friends
| dipped into them to close positions and shore up riskier
| trades made by another company Alameda.
|
| People rush to simplify here with 'there are no angels"
| arguments. It doesn't matter that it was crypto. Those
| funds were stolen.
| [deleted]
| jstx1 wrote:
| Give it some time, he only got arrested hours ago and the DOJ
| still haven't unsealed their case.
| Frost1x wrote:
| I always find it interesting how in our implementation of
| capitalism here in the US, wealth is able to insulate and
| protect itself from many of the very measures capitalism is
| supposed to peel away and counter (in the interest of society
| at large).
|
| It's almost like it there are fundamental inherent flaws that
| need to be fixed to continue on and we can't keep treating
| things like business is usual if we want to enable continued
| growth vs stagnation due to power concentration like we've
| seen in non-capitalist systems in the past.
|
| You're going to see the big players like Sequoia get some
| retribution here and to a magnitude that's significant enough
| to be usable and recoverable, meanwhile you're going to see
| all sorts of others life savings evaporate, resulting in a
| far less recoverable scenario, with little to nothing
| recovered--at least that's how this tends to play out,
| historically. Everyone will of course lose, but you'll see
| disproportionate losses and disproportionate recoverability.
| Disproportionate wealth as a proxy to power does this.
| simple-thoughts wrote:
| It's the fundamental contradiction of modern capitalism
| (capitalist ownership of the means of production). On the
| one hand, it claims itself as privately owned capital, but
| on the other hand relies on the state to maintain this
| ownership. At some point this will break either into an
| ancap privatism or a communist socialism, because one side
| on the rope will eventually win as technology breaks down
| the human social control systems that allow this
| contradiction to persist.
| nikanj wrote:
| The various players in crypto space have written a ton of EULA
| mumbo-jumbo explaining that the coins are not securities (as
| they want the freedom to pump&dump/front run orders/etc). If
| they admitted the cryptos are securities, all sorts of pesky
| regulations would apply
| MrPatan wrote:
| Stealing securities you're supposed to store for me is a
| crime.
|
| Stealing non-securities you're supposed to store for me is
| also a crime.
| Sporktacular wrote:
| Yes, thank you! So many comments are like "it's a crypto
| investment, you shouldn't expect safety" when they weren't
| investments but holdings. As if this was just market forces
| at play. They have no idea about happened here.
| master_crab wrote:
| Yup. At the end of the day, this isn't complicated. The man
| directed assets (whatever you label them) that were clearly
| meant for the use of the owner only into SBFs investment
| vehicle for his use (Alameda).
|
| He stole coins, period.
| freejazz wrote:
| Admitting or not that something is a security is not a
| requisite for the thing to be found to be a security.
| rundmc wrote:
| He essentially admitted this in recent calls so it's a 'safe'
| charge that the SEC used to get him arrested in Bahamas and
| presumably his personal assets will also now be frozen while
| they assemble the rest of the consumer fraud and other charges.
| nradov wrote:
| The SEC didn't get SBF arrested in the Bahamas. That was done
| by the DOJ. The SEC has brought a separate parallel civil
| enforcement action.
| DannyBee wrote:
| correct the SEC cannot charge people criminally
| [deleted]
| winstonprivacy wrote:
| It's not that curious at all really.
|
| The SEC is authorized to pursue criminal cases for securities
| fraud (among many other things). Furthermore, they can refer
| criminal cases to the Dept of Justice, which has almost
| certainly happened.
|
| To the extent that FTX defrauded consumers, these will be
| reflected in civil and criminal cases.
|
| To my knowledge, the SEC does not protect deposits in the event
| of bankruptcy. Most individuals with assets on deposit at FTX
| are unsecured creditors.
| hnmullany wrote:
| The "S" in SEC stands for "Securities" -> they are chartered to
| protect investors. There are other bodies who are chartered to
| protect consumers.
| pavlov wrote:
| People who bought the FTT token on the FTX exchange most
| likely thought of themselves as investors, since the token
| promised rewards tied to the exchange's cash flows.
|
| I'm not sure it's fair that the big boys get investor
| treatment and the retail suckers who were led to believe
| they're investing get... nothing so far.
| jack_pp wrote:
| Maybe financial companies not founded in the US shouldn't be
| allowed to advertise to US companies at all.
| jacquesm wrote:
| I don't see how that would work in practice, nor would the US
| want it that way because it would almost certainly be
| mirrored in the other direction.
| fredgrott wrote:
| You seem to forget the debate between the SEC and the other org
| that want to regulate crypto.
|
| The reason SEC moved this fast was to add to their counter-
| point argument that they should be allowed to fully regulate
| crypto as securities.
| pavlov wrote:
| No, this case is not about crypto at all. It's about FTX
| shares and that's unequivocally the SEC's jurisdiction.
| nova22033 wrote:
| _a case to protect rich VC crypto-bro partners_
|
| This may seem unfair but this is their best shot at securing a
| conviction. Elizbeth Holmes was convicted for defrauding
| investors, not users of Theranos devices.
|
| Either way, the money is likely gone. Nobody is being
| protected.
| duxup wrote:
| It should be noted Samuel is a really rich guy too, and he is
| being charged.
| [deleted]
| boplicity wrote:
| Frankly, it seems to me that VCs should be _liable_ for money
| FTX owes its customers. These are professional investors who
| didn 't insist on very basic things, such as proper financial
| sheets from a _finance_ company. Frankly, that 's gross
| negligence. Professional investors should have legal
| responsibility to do at least _some_ due diligence. In
| addition, they 're becoming owners of a company. As owners, why
| shouldn't they be exposed to liability that could have been
| prevented with some basic due diligence?
| pavlov wrote:
| I agree! For VCs, crypto has been a "Heads we win, tails you
| lose" proposition.
|
| Normally it takes 3-10 years for a VC investment to reach an
| exit. In crypto, they get tokens that they've been able to
| dump to retail almost immediately. A16Z has a particularly
| suspicious shitcoin pipeline via their Coinbase board seat.
|
| I hope SEC also ends up prosecuting investors who
| participated in these token offerings, and ideally also
| employees who got paid in tokens [1]. But I have no idea if
| there's a legal basis because American securities law is
| designed to protect investors and doesn't necessarily seem to
| account for the A16Z-style case where they're essentially co-
| conspirators in the fraud: supplying crypto founders with
| money for marketing which pulled in retail dollars which
| ended up straight back to the VC's and founders' pockets.
|
| [1] What difference does it really make if you're a founder
| selling unlicensed securities, or an employee who signed a
| contract where you get paid in those unlicensed securities
| and then you dump them on retail investors? The SEC should
| look at these schemes which were popular with companies that
| hire on HN too.
| LarryMullins wrote:
| > _I hope SEC also ends up prosecuting [...] employees who
| got paid in tokens_
|
| Prosecuting those rubes for being among the victims? If
| there is evidence they pumped and dumped those tokens or
| didn't report their income correctly, then sure. But
| otherwise, why prosecute people for being stupid enough to
| accept payment crypto?
| jacquesm wrote:
| You are correct, insofar as we're not talking about the LPs
| of those funds, but the managers.
| phphphphp wrote:
| Setting aside the arguments to be made for/against the idea,
| and focusing on the implementation instead: most investments
| are handled through some sort of limited liability vehicle
| and so even if the "investor" was held responsible it would
| not necessarily impact the human(s) that stood to gain.
| zeroonetwothree wrote:
| I suppose we need some criminal law in that case.
| beefield wrote:
| At a minimum, tax code should be changed to discourage
| limited liability corporation forms. Personally I'd also
| like to see that limited liability as a concept would be
| forbidden in many/most industries/cases. In Brazil the
| management and owners of a bank may be held liable if
| bank fails even without wrongdoing. And I think there has
| not been many failing banks in Brazil...
|
| https://www.economist.com/finance-and-
| economics/2013/05/04/b...
|
| (Paywall, check google cache)
| el_nahual wrote:
| Often VCs will have a seat on the company's board--in which
| case they might be liable.
|
| However, it doesn't seem that Sequoia et al had seats on the
| board, at least from this early 2022 press release [1].
|
| Holding shareholders that are _not_ directors accountable is
| extremely difficult. This is called "piercing the corporate
| veil" (worth a google) and is done only vary rarely and in
| cases of clear and outrageous misconduct attributable to the
| shareholders themselves--it's so rare because it's
| antithetical to the entire premise of the "limited"
| corporation.
|
| [1] https://www.prnewswire.com/news-releases/ftx-us-
| derivatives-...
| gergov wrote:
| Which makes it even more interesting. One of the most head
| scratching pieces of this puzzle that SBF got truckloads of
| VC money with laughable fundraising rounds + no board
| seats.
|
| It didn't make any rational sense.
|
| Unless the logical conclusion is that it means 'zero
| liability'.
| jstx1 wrote:
| > If I were a retail investor who lost my savings in FTX, I
| might be feeling upset that the government is rushing to action
| in defense of billion-dollar funds whose own due diligence
| failed massively, while seemingly nothing is being done to help
| those who invested in crypto based on FTX's Super Bowl ads and
| celebrity endorsements...
|
| It's not one or the other, he can be charged for both. It's up
| to the DOJ to file a criminal case, and they didn't arrest him
| for no reason.
| vithlani wrote:
| matwood wrote:
| I'll just quote part of what I said a month ago :)
|
| > And given what's leaked from their balance sheet, I don't see
| how people avoid jail time.
|
| https://news.ycombinator.com/item?id=33608691
|
| I'll also add that SBF going on tour was the stupidest thing he
| could have done. Every time he spoke, he was giving the
| government more evidence. Hubris has often been the downfall of
| the rich and powerful throughout history. What's changed is now
| we get to see it in real time with people like Musk and SBF.
| thepasswordis wrote:
| >like Musk and SBF
|
| I'm sorry, but _what_?
|
| Just to give some perspective that I don't think HN really
| gets: most of my friends have _increased_ their twitter usage.
|
| If you aren't aware, whatever the team did there a few days ago
| really _has_ appeared to cut bots down to almost 0.
|
| SBF is an [alleged] criminal who has [allegedly] defrauded
| people of billions of dollars, and will likely be spending a
| substantial amount of time in prison for it.
|
| These things aren't the same. A restaurant changing their menu
| to suit a larger audience is not "hubris" simply because it no
| longer caters to you.
| astrange wrote:
| I've gotten more bots, all three of crypto pump replies, sexy
| women accounts following me, and group DMs about job offers
| in Japanese.
| matwood wrote:
| If we assume (big assumption) Musk has done everything right
| since the closing, he may still just be rearranging the deck
| chairs on the titanic. His hubris got him stuck in a deal way
| over paying for Twitter. I think he thought he could run his
| mouth and get out of any real consequence _like he 's done
| every other time_. Except this time he found out.
| actualwitch wrote:
| > Just to give some perspective that I don't think HN really
| gets: most of my friends have increased their twitter usage.
|
| So your friends are using twitter more and you just assume
| everyone else does too? Have you considered that people who
| have other opinions exist and theirs is as valid as yours?
| zeven7 wrote:
| > Have you considered that people who have other opinions
| exist and theirs is as valid as yours?
|
| I think parent is saying the opposite.
|
| "Just to give some perspective that I don't think HN really
| gets"
|
| Parent has seen several comments assuming everyone's
| leaving Twitter and Musk is destroying the platform and
| himself and will never recover. I, likewise, reading Reddit
| get the same feeling that some pockets think everybody is
| leaving Twitter and going to Mastadon or something like
| this is a big cultural revolution. I think that is true in
| some pockets, but like parent I don't think anyone except
| Musk really knows what the actual engagement numbers look
| like, and even he doesn't know what they'll look like long
| term. But he is clearly making a bet, and it's silly for a
| biased hivemind to already assume his downfall when it
| actually hasn't happened yet. Just like there was a broad
| assumption that Twitter would have all kinds of technical
| issues after most of the staff was fired. Maybe that's
| still to come, but it hasn't really happened yet, and it
| can't be assumed.
|
| Twitter isn't _necessarily_ going to be an epic failure,
| and it 's strange how some pockets of the internet feel
| they should make that assertion, whether you agree with
| Musk's politics or not. And politics is what it really
| comes down to. Politics is what drives the desire for these
| communities to see Musk fail, nothing else.
|
| And at any rate it is very strange to compare Musk to SBF
| in any way.
| matwood wrote:
| Everyone assumed my comment about hubris referred to how
| he's running Twitter now. I think what he's doing is
| dumb, but that's not my point. His biggest problem is he
| way overpaid, and saddled the company with a ton of debt.
| My hubris comment was referring to him talking big and
| signing a deal he never intended to follow through on. He
| could run Twitter perfectly and still be forced into
| bankruptcy by the end of '23. IMO, that's a very likely
| scenario.
| zeven7 wrote:
| Agreed on all points here.
| mradek wrote:
| Twitter use is up because everyone wants to see the sometimes
| insane tweets put their by their top leadership. I had never
| used twitter prior to Elon taking over, and I made an account
| to check it out for a week or two.
|
| Ultimately stopped using it because it isn't really for me. I
| also don't care enough for anyone's opinion that much that
| I'm willing to scroll through insanity, bots, and a holes to
| find a nugget. But I'm sure millions of others do enjoy that.
|
| HN is my fav social media lol.
| [deleted]
| katbyte wrote:
| > most of my friends have increased their twitter usage.
|
| it doesn't matter if people use the platform more if they
| don't pay for the blue check or if advertisers are not
| interested in paying for ads.
| HN_is_for_gemes wrote:
| Yes, because marketers don't care about audience size and
| they have a long history of being strictly moral people.
| linuxftw wrote:
| I qualify as a marketer. I don't want my ads seen by
| people not local to my market. Audience size alone isn't
| useful, it's about target audience, of which, almost none
| of that would have been blocked recently. (I don't use or
| market on twitter).
| PhasmaFelis wrote:
| Marketers care very much about the context their ads
| appear in, which is why they're leaving Twitter in
| droves.
| https://www.npr.org/2022/11/25/1139180002/twitter-
| loses-50-t...
|
| Musk has already had one public tantrum about it.
| https://twitter.com/elonmusk/status/1597285572699074560
| uoaei wrote:
| It's almost like they don't have infinite money and need
| to decide where to allocate their resources.
| [deleted]
| kibwen wrote:
| _> most of my friends have increased their twitter usage_
|
| Meanwhile, all of my friends have erased their Twitter
| accounts (some migrating to Mastodon, others to other social
| media sites, others happily forgoing social media at all),
| all of the organizations I'm a part of have stopped using
| Twitter for official communication, the subreddits I follow
| have banned Twitter links, and my product has removed its
| Twitter integration. Large swathes of the internet are
| defederating from Twitter.
| [deleted]
| SilverBirch wrote:
| Just for reference what Musk did is just blocked half the
| mobile carriers in emerging markets, kneecapping their
| ability to grow Twitter in those countries whilst only
| temporarily tamping down on bots. The bots will be back, the
| users won't.
| ollien wrote:
| Do you have a source on this?
| matwood wrote:
| https://www.platformer.news/p/how-elon-botched-his-war-
| on-bo...
|
| > The project was part of Elon Musk's attempt to rid
| Twitter of spam. But rather than work to remove
| individual offenders, the company identified mobile
| networks associated with large spam networks in specific
| countries, and blocked users who relied on those networks
| from receiving SMS messages from Twitter, impacting
| people with two-factor authentication. Then it blocked
| traffic from those carriers completely.
|
| > From 5:35 AM to 6:45 AM PT on Sunday, Twitter shut down
| access to the primary telecom providers in India and
| Russia, as well as the second biggest telecom company in
| Indonesia, Platformer has learned.
| blululu wrote:
| Honest question: are low income users viable for an ad
| supported platform? As it is I think only North American
| online ads actually make decent money, though perhaps
| European and Asian ad markets also deliver value close to
| break even. It is all an investment in the future. The last
| 15 years have had a belief that more users means more money
| but this might be thinking that all users are the same when
| some are much more valuable than others.
| blamazon wrote:
| "Mitchell and Webb - Kill The Poor":
|
| https://youtu.be/owI7DOeO_yg
| SilverBirch wrote:
| Meta makes revenues of about $15Bn in US & Canada, $8Bn
| in the EU and $10Boutside of EU & US/Canada each year. So
| it's clearly not nothing, and it's not like Twitter can
| afford to be picky about where it makes money.
| AmericanChopper wrote:
| > it's not like Twitter can afford to be picky about
| where it makes money.
|
| Being picky about where you make your money is absolutely
| essential for most businesses. Every dollar in revenue
| costs some amount of money to generate, and choosing the
| right market segments to invest that money in is a
| foundational part of a business plan.
| CamelCaseName wrote:
| Meta is insanely deep in those countries outside the
| EU/US/CA though.
|
| As in, they are "the" internet for users who get it for
| free on their mobile plans and everything else costs
| exorbitant amounts of money.
|
| I don't quite think Elon could do that, unless Starlink
| really takes off I suppose.
| P5fRxh5kUvp2th wrote:
| If the plan was to do something short term while a better,
| longer term fix, is put into place, that sounds reasonable.
| misiti3780 wrote:
| Aaronstotle wrote:
| Everyday I am tagged in a crypto bot spam comment and get
| invited to a spam group DM. Twitter still has issues
| [deleted]
| bluGill wrote:
| If he wasn't the type to go on tour and shout, then he wouldn't
| have attracted enough investors in the first place to be rich.
| It takes a specific personality to market things so others will
| buy, and that personality doesn't like to shut up and so won't.
|
| Some things sell themselves, but most great ideas sit around
| unknown by people who need them just because they don't know
| about it. I'd love to buy a better mousetrap to take care of my
| mouse problem, but if one exists I don't know about it. If you
| shout that your mouse trap is better I'll probably try it.
| blitzar wrote:
| It worked to get him to a net worth of 100bn why wouldnt it
| work again.
| zeven7 wrote:
| Right, everything in his life up to this point has taught
| him that if he keeps talking he'll be able to convince
| anybody of anything. He convinced his series B investors to
| hand over $420 million in "investment" funds to FTX while
| he pocketed $300 million of that personally.
| macrolime wrote:
| I think I know just the thing for you. It's a sophisticated
| autonomous mousetrap that doesn't even need bait, as it has
| the ability to locate and catch the mouse all by itself. With
| its unique combination of strength and agility, this
| mousetrap is able to outsmart any mouse. When you least
| expect it, the mousetrap will pounce and capture its target.
| It's called a cat.
| 0xbadc0de5 wrote:
| "won't somebody /pleeease/ think of all those poor VC's"
|
| Facetiousness aside, whatever results in seeing those responsible
| held accountable is a step in the right direction. I suspect that
| this was the easier case to prepare and that the customers will
| eventually see their day in court as well.
| lajosbacs wrote:
| I hope that swiftness of these charges will slightly diminish all
| these voices that keep repeating everywhere that 'the man' is on
| it with him, that the media defend him etc.
| guardiangod wrote:
| >diminish all these voices that keep repeating everywhere that
| 'the man' is on it with him, that the media defend him etc.
|
| Nah. Now they switched to "doing this fast to protect the big
| names/rich people".
|
| You never win.
| cycrutchfield wrote:
| Unlikely. That sound you hear is the goalposts being moved yet
| again
| bena wrote:
| Yeah, now the charges are "too soon" or something.
|
| I noticed the behavior living in oil country concerning gas
| prices. When gas prices go up, that's bad because it makes
| everything costs more. When gas prices go down, that's bad
| because it makes the oil and gas industry fire everyone and
| then no one has jobs.
|
| Apparently there's a Platonic ideal price for gas, just no
| one can tell me what that is.
|
| Also with various shootings. Right after, it's too soon to
| talk about current gun laws. Too long after, it's pointless
| to talk about because there hasn't been an incident in so
| long. We missed the window yet again. But no one will tell us
| when that window opens.
|
| Same thing here, apparently there's a perfect amount of time
| for charges. The Goldilocks zone, the golden hour, when the
| planets align and you can charge criminals for crimes and
| you'll magically have enough evidence and not too much time
| has passed. But try to pin down anyone on a concrete time
| frame and you'll get almost as much deflection as SBF tried
| to give the world.
| cycrutchfield wrote:
| Now you're starting to understand. This is the way of the
| cynic. Everything is awful all of the time and it's all
| somebody's fault. If I blame everybody for everything, then
| I don't ever need to use my brain and think critically.
| ethanbond wrote:
| It won't, just like even in this thread you see the perennial
| "this is good, actually."
|
| At rock bottom the crypto world is held up by unadulterated
| greed and it shows on both ends: I am willing to make too-good-
| to-be-true "investments" because greed; when that unfolds the
| obvious way it was going to then it's someone else's fault and
| they're not moving fast enough -- also greed.
|
| In short: "Why aren't I rich yet, I'll speculate" -> "why
| aren't I whole yet, I'll speculate again!"
| Majromax wrote:
| > It won't, just like even in this thread you see the
| perennial "this is good, actually."
|
| That's not quite what the grandparent poster was talking
| about.
|
| One strain of thought on FTX/SBF has been conspiratorial.
| Allegedly, SBF was "a big Democratic donor" with connections
| in high places, so he would evade any serious US-based law
| enforcement action.
|
| This view is likely related to FTX's (previous) attempts to
| present itself as the lawful-good crypto exchange, actively
| lobbying for US regulation. Such efforts necessarily come
| with a lot of political deal-making, making the idea of a
| corrupt bargain more superficially plausible.
| Sporktacular wrote:
| Please don't feed the distraction machine. He donated just
| as much to Republicans.
| ethanbond wrote:
| Right, I'm aware of this. My claim (feel free to disagree)
| is that this conspiratorial thinking is coming from the
| exact same region of CryptoBrain as what built up crypto-
| land and FTX/SBF to begin with. It is the sensation that
| you are in on something special, everyone who is not in on
| it is either an antagonist or an idiot, and you deserve
| more than they deserve.
| vgatherps wrote:
| I would suspect it's also that crypto tends to attract
| "government bad" sort of folk with the whole "rebuild
| some decentralized world" or something, as well as folks
| whothink "government bad" because they don't want those
| pesky regulators getting in the way of ponzishop1000 as
| they can only see the next bull market in their mind.
|
| I think a lot of people are in the second camp, but dress
| it up as the first. It's funny how tons of people who
| claim "I'm here for the tech, hodl" get mad whenever
| somebody shorts their coin or the price goes down
| paganel wrote:
| > that the media defend him etc.
|
| I don't any have any cent invested in all this crypto madness,
| but I would have expected bigger fish to fry as a result of all
| this shitshow.
|
| For example the head of SEC itself to fall [1]. Or maybe the VC
| industry itself to see material consequences of its amateur-
| hour due-diligence, and I'm not talking about the couple of
| hundred million of not their money that Sequoia lost on this,
| but of withdrawals worth tens of billions out of an industry
| that is run by know-nothings (and who know-nothings bring our
| industry down as a whole as a result of their shitty resource
| allocation).
|
| [1]
| https://twitter.com/EpsilonTheory/status/1591182630942539776
| lajosbacs wrote:
| Not defending Sequoia, but I'm pretty sure that they have
| lost their money as well -- private equity always invests
| along with their investors.
| jpgvm wrote:
| a16z and Sequoia deserve their losses.
|
| They both went all-in on this crypto bullshit in their latest
| funds and convinced otherwise healthy companies to pivot into it
| also. Their returns for these latest funds will be decimated and
| I couldn't be happier.
| misiti3780 wrote:
| a16z didnt invest in FTX did it ? ( i agree with your thesis
| nonetheless)
| jpgvm wrote:
| I don't think so no, but they were the other VC that all-in'd
| on crypto.
| misiti3780 wrote:
| for sure, chris dixon blocks anyone on twitter than doesnt
| cheerlead web3
| srj wrote:
| They will probably be the only ones who get some of their money
| back.
| UltraViolence wrote:
| I hope he rots in jail like that other fraudster Madhoff.
|
| I'm pretty sure he already saw this coming and moved his assets
| into his family circle. In addition he probably also set out to
| destroy incriminating evidence and contacting political
| proponents to call in favors.
| rootusrootus wrote:
| > I'm pretty sure he already saw this coming and moved his
| assets into his family circle.
|
| That's a mean thing to do. Just ask Madoff's family how that
| works out.
| bouk wrote:
| Ah yes of course, as Matt Levine would say: everything is
| securities fraud
| janandonly wrote:
| Everyone who bought and held on to their bitcoins in their wallet
| instead of storing the coins with a custodian (exchange or
| otherwise) is still in full possession of said coins. _not your
| keys, not your coins_ as the saying goes.
|
| However, all this bad news and also the fact that FTX was selling
| coins without delivering them, meant that a lot of upward BTC
| price movement for the last 1,5 years was missed out of.
|
| Furthermore, the current "bad crypto news" is still suppressing
| the BTC price. This is good in the long run: people can still buy
| their bitcoins for a ridiculously low price (it's a fire sale,
| basically).
|
| Any regulatory clarity (which of all these coins are a
| "security"?) will also do the market good.
| Majromax wrote:
| > not your keys, not your coins as the saying goes.
|
| > Furthermore, the current "bad crypto news" is still
| suppressing the BTC price.
|
| This is a contradiction. The high price of cryptocurrency is
| based in part on intermediated (ETF-style) and leveraged long
| bets.
|
| If everyone took your advice and kept custody of their own
| keys, the crypto space would be much less speculative. That's
| probably not a bad thing, but it would not obviously herald a
| return to high prices.
| tsimionescu wrote:
| You have it the other way around almost 100%. The reason crypto
| has the absurd valuations that it does have is entirely because
| of the centralized exchanges that were offering an easy way for
| lots of actual money to come into the space (and leave it).
|
| As the larger exchanges collapse, it's also clear that many of
| these prices were simply invented. For example, it's pretty
| clear that FTX + Alameda alone invented at least a few billion
| dollars that simply never existed, but that were priced into
| BTC and others. Tether is almost certainly doing something very
| similar, as may be Binance and others.
|
| And these are just some of the make-believe dollars in crypto.
| You then have all of the minor coins where someone buys one for
| a dollar and sells it back for two dollars, and someone else
| who had bought a thousand for a thousand dollars gets shown by
| some exchange that their funds doubled in value! And now they
| can leverage that to buy even more worthless coins, causing
| someone else to think their funds are increasing in value and
| so on.
|
| It's all a house of cards propped up by savvy unscrupulous
| marketers.
|
| Will BTC or ETH or Monero fall to 0 if the exchanges died?
| Probably not, as people actually do use them in some small
| measure (international payments with countries with failed
| banking systems, money laundering, evading sanctions, etc). But
| they would be back closer to where they were 10 years ago, a
| few dollars or maybe hundreds of dollars for 1 BTC. And most of
| the others would just die out.
| matt_s wrote:
| > fact that FTX was selling coins without delivering them
|
| I think you missed the point parent was making about the
| fraud of accepting money for $crypto_thing and not actually
| buying $crypto_thing and just moving the money to the Alameda
| hedge fund. All of that purchasing never impacted the prices
| of $crypto_thing.
|
| The other thing that will be interesting is if they uncover
| fraud around $crypto_things that were supposedly tracking
| actual SEC regulated securities as a derivative and if any
| Wall Street finance firms were using those FTX derivatives as
| part of their business.
| bioemerl wrote:
| > Furthermore, the current "bad crypto news" is still
| suppressing the BTC price.
|
| What determines the natural price that is being suppressed
| here?
| OnuRC wrote:
| Price discovery?
| bioemerl wrote:
| What determines the price that the discovery discovers?
| quanticle wrote:
| Everyone who bought and held on to their bitcoins in their
| wallet instead of storing the coins with a custodian
| (exchange or otherwise) is still in full possession of
| said coins. not your keys, not your coins as the saying goes.
|
| "Not your keys, not your coins" is probably the single largest
| blocker to crypto adoption, in my opinion. With every other
| financial asset, custodial accounts _just work_. Putting a
| hundred dollars into a bank account is, thanks to bank
| regulation and the FDIC, the same as putting a hundred dollar
| bill underneath my mattress. I 've traded a bunch of stocks,
| and not once have I ever thought about acquiring an actual
| stock certificate, because thanks to regulations and the SIPC,
| having stock in a custodial account is the same as having a
| physical stock certificate in a safe at home.
|
| "Not your keys, not your coins" is viable only in some kind of
| libertarian fantasy. In the real world, regulated, insured
| custodial accounts are useful and available for pretty much
| every security available to individual investors... save
| crypto.
| kkielhofner wrote:
| Exactly. The vast majority of crypto "usage" is people
| trading on exchanges - which is pretty difficult to do when
| your crypto is stored in a wallet with the seed phrases
| etched on steel plates and buried in your yard...
|
| As you noted the overwhelming majority of money worldwide is
| stored very safely in custodial fashion so people can
| actually /do something/ with it.
|
| As I've also noted before we're going to see a drastic uptick
| in the coming weeks/months/years of people losing access to
| all of their crypto because of the UI/UX challenges inherent
| with self custody. I don't think many of the people who are
| rushing out to buy a Ledger or otherwise move to a non-
| custodial wallet fully understand that unlike everything else
| in the world there is no password reset option or customer
| service number to call when people inevitably do what people
| do and make a minor mistake.
|
| There is going to be a lot of heartbreak from people losing
| everything because of forgotten passwords, wallets getting
| hacked, etc.
| [deleted]
| bfgoodrich wrote:
| Aicy wrote:
| More large crypto businesses are likely to collapse because
| they were highly leveraged and now with their debtors failing
| (other crypto firms like FTX) and their assets falling (crypto)
| they will be forced to sell their assets to cover losses
| (crypto) which will push the crypto market down even more.
| cs702 wrote:
| The most interest aspect in the FTX saga, for me, is that SBF was
| treated _very gently_ by major news outlets (and maybe by
| government regulators too)... _until_ regular individuals in
| social media started asking: Why is SBF being treated so kindly?
| Why would journalists (and regulators) _assume_ that SBF _meant_
| well?
|
| A possible answer that no one ever mentions is that SBF possesses
| many qualities that are valued and admired in elite circles.
| Consider:
|
| * SBF attended MIT, an institution that is valued and admired in
| elite circles.
|
| * At MIT, SBF majored in Physics and Math, two difficult subjects
| that require hard work, academic rigor, and high intelligence --
| all qualities that are valued and admired in elite circles.
|
| * Both of his parents are prominent professors at Stanford, so
| they are also valued and admired in elite circles. Presumably,
| over the years they tried to instill in SBF the values and
| behaviors that are most prized by other members of the elite --
| including honesty.
|
| * By all accounts, SBF truly _could understand_ and _could
| explain_ the distributed consensus protocols and algorithms that
| enable crypto-assets -- abilities that are valued and admired in
| elite circles.
|
| * By many accounts (before FTX's implosion), it _seemed_ that SBF
| actually believed in his own slogan, "effective altruism" -- the
| kind of inspiring idea that is valued in elite circles.
| hintymad wrote:
| > Why would journalists (and regulators) assume that SBF meant
| well?
|
| On "meant well", this seems the mirror of attacking one's
| motive. I noticed that journalists loved to assume the worst of
| the people they don't like and assume the best of those they do
| like. Attacking one's motive is really a malicious logical
| fallacy, as it's practically impossible to defend against such
| attacks. I really hope journalists focus on what people do
| instead.
| JeremyNT wrote:
| > The most interest aspect in the FTX saga, for me, is that SBF
| was treated very gently by major news outlets (and maybe by
| government regulators too)... until regular individuals in
| social media started asking: Why is SBF being treated so
| kindly? Why would journalists (and regulators) assume that SBF
| meant well?
|
| This wasn't universally true. See the VICE coverage for
| example.
|
| The "old" media bought into SBF in exactly the same way it
| bought into Elizabeth Holmes, presumably for some of the same
| reasons. They have a strong bias/gravity towards covering
| "wunderkind" entrepreneurs, and they do "access journalism"
| with these people. It's more about their personal lives and
| personalities, because that's the story that always sells.
|
| In addition, most outlets (including the NYT) have had a
| massive blind spot into how shady everything in the crypto
| space really is. They've long bought the bullshit, and many of
| their "crypto reporters" are unquestioning crypto bros who
| basically are industry mouthpieces rather than real
| journalists. So in a sense they're actually complicit in all
| the scams and losses, because they've boosted the fiction that
| "crypto" is somehow legitimate.
|
| One has to hope that a corner has finally turned here, and
| SBF's highly visible fall will cause these "old" outlets to
| start doing actual real journalism on the whole "industry"
| rather than just fluff pieces and boosterism.
| stevespang wrote:
| bnralt wrote:
| > The most interest aspect in the FTX saga, for me, is that SBF
| was treated very gently by major news outlets (and maybe by
| government regulators too)... until regular individuals in
| social media started asking: Why is SBF being treated so
| kindly? Why would journalists (and regulators) assume that SBF
| meant well?
|
| I went through a few examples people brought up of journalists
| supposedly treating Bankman-Fried kindly the other day[1]. When
| I read what journalists were actually saying, they were quite
| negative about Bankman-Fried (saying he was "betraying his
| clients" or saying FTX "didn't crumble due to bad luck, but
| what now appears to be unsustainable layers of deception").
|
| The crypto community seems to be trying really hard to deflect
| from the fallout of yet another major crypto scam, and spinning
| whatever they can to make this seem like this is the fault of
| establishment non-crypto folks. Remember that just a few days
| ago people were claiming that Bankman-Fried hadn't been charged
| because he had paid off U.S. politicians.
|
| [1] https://news.ycombinator.com/item?id=33811681
| reaperducer wrote:
| _crypto community seems to be trying really hard to deflect
| from the fallout of yet another major crypto scam_
|
| For the last few months, any time something bad happens with
| FTX, there are dozens of people who show up complaining that
| the media went easy on SBF. They most often use the word
| "puff" or the phrase "puff piece," as if the comments were
| all written by the same bot farm.
|
| Then when someone calls them out on it, they're suddenly
| silent. Which makes me agree with you that this is people
| trying to deflect from the greed at the root of this, trying
| to portray themselves as victims, and if the big media had
| just given them some warning, they wouldn't have lost
| billions of dollars.
| kibwen wrote:
| Agreed, it's eye-rollingly obvious how cadres of users have
| been parroting talking points for various circles, some as
| an attempt at distraction/deflection and others as an
| attempt at political gain. It all appears to boil down to
| beating the same "lamestream media" horse. Never let a good
| crisis go waste, as they say.
| [deleted]
| sifar wrote:
| >> When I read what journalists were actually saying, they
| were quite negative about Bankman-Fried
|
| I think the issue was there was no pressing follow up to his
| evasive replies. e.g Sorkin's interview. He was basically
| allowed to get away with "I didn't knowingly do it."
| skybrian wrote:
| Sometimes they don't follow up because the statement is
| obviously evasive nonsense and readers will see it. Just
| letting them say damning things on the record is a win.
|
| And if you don't confront them, maybe they'll say even
| more? It's like the military quote: "never interrupt your
| enemy when he's making a mistake."
| freedude wrote:
| Well lets be completely honest then...
|
| And sometimes they don't confront them because the media
| are shills.
| yterdy wrote:
| Your definition of "quite negative" and mine are very
| different. When it comes to situations like this (regarding a
| young man, his criminal misbehavior, and insitutional
| response to that behavior e.g., mass shooters), I generally
| go back to the New York Times' infamous characterization of
| Michael Brown - a black teenager shot dead in the street and
| in broad daylight, over a box of cigarillos, by a police
| officer with a checkered professional history - as "no angel"
| (among other declarations). If you can't muster something
| perhaps at least as critical for an older young man who has
| nuked a measure of wealth equivalent to about half the GDP of
| the country where his company was based (or, the total wealth
| of ~50,000 Americans at the median net worth; or, a few
| hundred million boxes of cigarillos), well... Maybe you're
| going easy on him.
|
| It's naive to think that affinity is not influencing, if not
| driving, the way that journalists regard and write about
| their subjects.
| zeven7 wrote:
| > Several months ago, I found myself having a few mocktails
| and splitting vegan snacks with Sam Bankman-Fried at a
| restaurant near my house. We touched on, among other things,
| his proposal to create a new publication featuring writers he
| liked, including me.
|
| > I declined, which obviously in retrospect was the right
| choice. I told him that I like my Substack just fine and make
| plenty of money, though he was happy to offer more. But I
| also told him that given the extent to which we agree on a
| lot of important issues, I thought it was a lot more valuable
| to these causes for me to maintain credibility by not
| accepting any of his money.
|
| Meanwhile the CEO of The Block received a $43M "loan" from
| SBF[1].
|
| [1] https://www.coindesk.com/podcasts/the-breakdown-with-
| nlw/sbf...
| waylandsmithers wrote:
| I would guess some number of people in these newsrooms either:
|
| 1) Don't understand anything about bitcoin 2) Own bitcoin and
| don't want to do something that would push the price lower
| jwmoz wrote:
| From what I can see money, wealth and power are valued in elite
| circles, not sure about what else.
| [deleted]
| 99_00 wrote:
| The establishment protects its own.
| lilsoso wrote:
| There are more curious details surrounding his parents. And
| you've neglected to point out the SEC connections.
|
| Also, how many lawyers has Sam had now? Who are they? Who have
| they previously represented?
|
| There's more to the story.
| PhasmaFelis wrote:
| Most of these seem to boil down to "he seemed like a smart guy
| who knew what he was doing and wanted to help people." That's
| basic grifting. It seems odd to say that it only works on
| elites.
|
| Particularly the last. Elites love to help people, unlike
| common folks who are too selfish to fall for a con like this?
| That's the opposite of the usual stereotype.
| Gareth321 wrote:
| To me this is just one more nail in the coffin of institutional
| media. There is clearly bias baked into reporting at the
| _institutional_ level now, and no desire to uproot it. This is
| what makes independent media so important today.
| LarryMullins wrote:
| Agreed, I think it's institutional. Particularly, the
| reporters at the big news firms come from privileged
| backgrounds, are biased towards their own, and use the access
| that comes with their privilege to further their careers.
| Those who come from modest backgrounds aspire to join the
| ranks of the privileged, necessary to further their careers,
| by sucking up to those above them. "Access journalism"
| intrinsically favors privileged journalists and incentivizes
| journalists from less fortunate backgrounds to play along.
| rax0m wrote:
| Arthur Hayes has written extensively [0] on these points.
|
| [0]: https://blog.bitmex.com/white-boy/
| jwmoz wrote:
| I hate the title. What if this was the other way round?
| yterdy wrote:
| You have about 300+ years of history to rewrite before it
| could ever even approach being the other way around.
| broknbottle wrote:
| HIStory
| BogdanPetre wrote:
| Really enjoyed reading that, thanks!
| rhaway84773 wrote:
| SBF didn't believe in his effective altruism slogan. He
| basically admitted in the texts to the reporter he thought
| would be private that the EA stuff was BS.
|
| Also, I'm not sure what you mean by "treated kindly".
|
| If you're talking about why he wasn't arrested yet, it's
| obvious because the SEC was building its case, and more so
| because he was voluntarily going on public forums and publicly
| admitting increasing levels of guilt.
|
| I never understood the people complaining about why he wasn't
| arrested yet. If you're a prosecutor making a case against
| someone, why would you stop them from going to the media and
| publicly boasting about new crimes?
| hammock wrote:
| >He basically admitted in the texts to the reporter he
| thought would be private that the EA stuff was BS.
|
| interested, source?
| itronitron wrote:
| they may be referring to this article...
|
| https://www.vox.com/future-perfect/23462333/sam-bankman-
| frie...
| misiti3780 wrote:
| they are referring to this:
| https://www.coindesk.com/layer2/2022/11/15/lets-talk-
| about-t...
| jcranmer wrote:
| I sat down and read the NYT article. It's not that
| glamorous for SBF--at best, it paints him as someone in way
| over his head, but I'm not sure that's a fair
| characterization. It's somewhat humanizing, but largely in
| a "what is the CEO thinking as their business falls to ash
| around them?"--it intersperses the interview with notes
| about how the company was probably lying at times, and the
| most contentious questions are summarized as "interviewee
| doesn't want to talk about them." I wouldn't characterize
| it as a puff piece, but I think the complaints are largely
| that people wanted it to be a thorough evisceration of
| Crypto Enemy Number One.
| hodgesrm wrote:
| This is a good point. Journalists get dinged for trying
| to pull out the truth. Andrew Ross Sorkin's interview
| with SBF seems like a case in point.
| jasonlotito wrote:
| > "Disgusting complicity on the part of the New York Times.
| He has ruined countless people's lives by theft and fraud,
| and NYT is now helping him to delay or evade justice by
| whitewashing him in their prestigious, influential
| newspaper. I doubt this is just a mistake on their part,"
| Zcash co-creator Zooko Wilcox said.
|
| This is a dumb take. They did not help him delay or evade
| anything.
|
| One could argue that the old way of journalism needs to be
| modernized for people who have challenges with context and
| understanding, like this quote demonstrates. Maybe expand
| on the concept of trigger warnings that detail things to
| consider while reading an article. Things that were common
| knowledge years ago, but seem to have been left in the
| dust.
| MrPatan wrote:
| Or maybe the NYT tried, but failed.
| cs702 wrote:
| _> SBF didn't believe in his effective altruism slogan._
|
| That's not what I meant.
|
| What I meant is that before FTX's implosion, anything you
| would read, hear, or see about SBF would make it _seem_ as if
| he actually believed in it!
| yonaguska wrote:
| Positive PR can be bought. SBF had tons of money. I'm not
| surprised.
| kibwen wrote:
| Rather than vaguely alluding, it seems simple enough to
| provide at least a handful of links to sources with
| references to the passages in question, no? Nothing that I
| have read seems to be as breathlessly gushing as commenters
| repeatedly claim them to be.
| LarryMullins wrote:
| blitzar wrote:
| > The most interest aspect in the FTX saga, for me, is that SBF
| was treated very gently by major news outlets (and maybe by
| government regulators too)...
|
| He wasnt
|
| > until regular individuals in social media started asking
|
| And there is the crux ... _until_ blah blah. "twitter" didnt
| get them over the line to arrest him. Neither I nor "twitter"
| can prove a counter factual but it is just a fantasy of people
| who have read and written too much shitty fan fiction that _SBF
| was never going to get investigated_
| Animats wrote:
| Madoff was treated very gently for _decades_.
|
| Incidentally, here's the list of real estate in the Bahamas
| purchased with FTX funds.[1] Here's the "Albany resort", where
| most of those properties are.[2]
|
| There was discussion earlier about prosecutors having to prove
| criminal intent. Did this happen by accident, or were those
| guys stealing the money for their own benefit? It doesn't
| matter much what Bankman-Fried has been saying. When the
| prosecutors have to convince a jury of criminal intent, expect
| those pictures of the Albany resort to be shown. They didn't
| buy all those luxury condos with FTX funds by accident.
|
| [1] https://restructuring.ra.kroll.com/FTX/Home-
| DownloadPDF?id1=...
|
| [2] https://www.albanybahamas.com/
| freejazz wrote:
| Or it just took some time to put the indictment together... I
| wonder which one is a simpler explanation...
| slibhb wrote:
| A lot of people have made this argument -- that he was treated
| gently -- but to me that looks like good old-fashioned
| journalism. People have become so acclimated to the decline of
| objective journalism that when they see it, something seems
| off.
| notahacker wrote:
| Yeah. People seem to be bizarrely fixated on the bits of
| stories where they mention what SBF was famous for and quote
| his excuses and don't state that he's definitely guilty of
| this crime that we were waiting to see if he'd be charged
| with, and miss the point that the headline is that the guy is
| accused of a serious crime and articles on famous people
| accused of crimes _usually_ mention what they 're famous for
| even if that's good, quote a denial/excuse if there is one
| and don't announce what they're guilty of before they've even
| been charged with anything.
|
| Sure, he did more full-blown interviews than most people
| accused of serious crimes, but that's mainly because most of
| them listen to their lawyers.
|
| If media outlets actually felt particularly kindly disposed
| towards SBF, they'd be deploying the rhetorical tricks used
| to defend their favourite politicians ( _can we trust the
| investigators? aren 't the big losers in FX the sort of
| financial institutions that were taking calculated risks
| anyway? and how many of them go to jail when they lose their
| customers' money? aren't other crypto institutions much worse
| and what's their role in Alameda's collapse? maybe he
| actually he could win all that money back, he's made billions
| before?_) not talking about how a one time darling of the
| Effective Altruism movement and former billionaire is under
| investigation after his brokerage collapsed after he
| allegedly transferred its customers' funds to prop up his
| other failing company. No matter how much biographical detail
| gets included beforehand, that's not a rosy picture.
| onos wrote:
| Impressed no discussion here of his large donations to the
| Democratic Party. That's the main talking point in conservative
| circles, whether accurate or not.
| nullcaution wrote:
| Occam's razor. I think the explanation for this treatment is
| much simpler, investment. Lots of these mainstream media corps
| probably have some interest in dammage control in crypto's
| price.. or they were being persuaded to be gentle by
| influential contacts in finance with intrest in stability. For
| instance, we know now Black Rock had a very significant stake
| in FTX. Its not totally crazy to think they might have reached
| out to Bloomberg or the Financial Times to keep the pressure
| off SBF.
|
| Consider the alternative where the media "slammed" SBF on the
| daily, it would further discredit crypto and lead to a faster
| decline in value, therefore it would be harder for financial
| institutions to efficiently devest from crypto without
| significant losses.
|
| Sorry, typed this on my phone.
| grappler wrote:
| I think it just took some parts of the media a few days to sort
| through the noise and pick up what the most important
| developments actually were, and perhaps get the necessary
| confirmations on the meaningful developments (and lack of
| confirmation on the wrong ones).
|
| It takes any profession time to correct mistakes and get the
| story right, but the media have the unenviable task of trying
| to do that very very quickly.
| [deleted]
| [deleted]
| hammock wrote:
| _> The most interest aspect in the FTX saga, for me, is that
| SBF was treated very gently by major news outlets (and maybe by
| government regulators too)... until regular individuals in
| social media started asking: Why is SBF being treated so
| kindly? Why would journalists (and regulators) assume that SBF
| meant well?_
|
| More interesting to me is that the DoJ moved to arrest SBF the
| night before he was set to testify in Congress. When else have
| prosecutors moved so aggressively to stop a defendant from
| making self-incriminating statements? His testimony would be
| admissible and likely devastating at trial
| EamonnMR wrote:
| The only thing gentle about how he was treated pre-collapse is
| that they didn't preface every article with a comparison to
| MtGox and a disclaimer to avoid the scam.
| yonaguska wrote:
| You keep using the phrase "valued in elite circles". I honestly
| don't think many of these traits are actually valued in elite
| circles. The perception of these traits is valuable. The
| values...I'm not so sure. Quite a bit of energy in elite
| circles is spent on curating an image, rather than actually
| being decent. You have a whole set of social rules that you
| follow to distinguish you from the lesser people, and it's all
| about following the rules, not actually being genuine. Actually
| being genuine- well, you're kind of a naive sucker, and even
| worse- you're unpredictable. Honesty is only valued so far as
| you follow the rules, and are honest about your own rational
| self interest when doing business. Hard work and high
| intelligence are definitely valued, but even more valuable is
| the person that is intelligent enough to not work hard.
|
| In my armhchair opinion, the Illusion of these values is simply
| a descendant of the feudal concept of Chivalry- it's important
| to have rules and social norms to establish an in-group of
| trust, and just as important for the non-elite to know that the
| elites have their best interest in mind, via "effective
| altruism"- because the elites are also honest, hard-working
| people, that got there through their honest hard work. And hey,
| maybe you can join that club if you invest in the right
| trustworthy person.
| zeven7 wrote:
| I'll guess the word "elite" here is not really the best term
| to convey what parent meant. The phrase "valued in elite
| circles" at first made me think of George Soros types, in
| which case the values don't fit. But I think parent meant
| more of the avocado toast NPR/NYT column writer types when he
| said "elites", in which case the values described make more
| sense.
|
| I'll disagree on the point about ability to explain crypto
| protocols/algorithms. You're either in tech and have a body
| of knowledge that preps you to understand the details and
| then you might care about it, or you don't really care about
| how it works. I don't think there's a group of "elites" of
| any kind that care too much about you explaining how crypto
| works.
| mlissner wrote:
| The whole case is here:
|
| https://www.courtlistener.com/docket/66631003/securities-and...
|
| And if you want to get free email updates as it develops, you can
| sign up here:
|
| https://www.courtlistener.com/alert/docket/new/?pacer_case_i...
| perihelions wrote:
| Note that the SEC's is merely a civil action. The federal
| _criminal_ indictment hasn 't been unsealed yet (but should be
| soon, today [0]).
|
| [0] https://apnews.com/article/technology-business-bahamas-
| unite... ( _" We expect to move to unseal the indictment in the
| morning and will have more to say at that time"_)
| insaneirish wrote:
| > Note that the SEC's is merely a civil action.
|
| The SEC can only bring civil action, for those wondering why
| it's a civil action.
| dang wrote:
| It's now being discussed here:
|
| _The United States of America vs. Samuel Bankman-Fried
| Indictment [pdf]_ -
| https://news.ycombinator.com/item?id=33969896
|
| I suppose we could merge these threads since it's not as if
| they're partitioned along the lines of "this thread for the
| civil complaint, that one for the criminal charges".
| arcticbull wrote:
| I believe the federal criminal indictment is public now. [1]
|
| - First count: Conspiracy to commit wire fraud to defraud
| customers.
|
| - Second count: Wire fraud on customers.
|
| - Third count: Conspiracy to commit wire fraud on lenders.
|
| - Fourth count: Wire fraud on lenders. (again, specifically
| lenders to Alameda)
|
| - Fifth count: Conspiracy to commit commodities fraud.
|
| - Sixth count: Conspiracy to commit securities fraud.
|
| I believe there's more, I quoted the above text from a thread
| by Frances Coppola [2].
|
| [1] https://www.johnreedstark.com/wp-
| content/uploads/sites/180/2...
|
| [2]
| https://twitter.com/Frances_Coppola/status/16026873331696025...
| etimberg wrote:
| https://www.bbc.com/news/live/world-us-canada-63953033 shows
| counts 7 and 8 as
|
| - Conspiracy to Commit Money Laundering
|
| - Conspiracy to Defraud the United States and Violate
| Campaign Finance Laws
| [deleted]
| [deleted]
| Finbarr wrote:
| Imagine reading a document like this with "United States of
| America v Your Name" at the top. It would be terrifying.
| These charges are serious and SBF is going to go down for a
| long time if convicted.
|
| There's also a forfeiture section in the federal indictment
| that demands forfeiture of all any and all property that is
| traceable to the commission of the offences.
| kibwen wrote:
| On a lighter note, here's _United States v. Approximately
| 64,695 Pounds of Shark Fins_ : https://en.m.wikipedia.org/w
| iki/United_States_v._Approximate... (the shark fins won)
| staticautomatic wrote:
| _in rem_ cases have the best captions
| rkagerer wrote:
| More of them here (scroll to US Examples): https://en.m.w
| ikipedia.org/wiki/In_rem_jurisdiction#United_S...
| greggh wrote:
| It is indeed terrifying. I have one, it was not fun.
| valleyjo wrote:
| Will his political donors have to give back the donations?
| [deleted]
| dragonwriter wrote:
| He is the donor. And, no, recipients of legal donations
| don't have to give them back because they came from a bad
| person. (The illegal donations he seems to have admitted
| to might have to be given up, but that's a separate legal
| issue.)
| lesuorac wrote:
| Not a lawyer but it does sound like any of the donations
| could be considered "not legal" would be "clawbacked".
|
| https://www.google.com/search?q=sbf+political+donations+c
| law...
| dragonwriter wrote:
| Well, yes, bankruptcy clawbacks are another issue on top
| of both the criminal forfeiture discussed upthread and
| the campaign finance issue I raised in response.
| 121110987654321 wrote:
| "The illegal donations he seems to have admitted to..."
|
| Source?
| arcticbull wrote:
| He's done a lot of ill advised Spaces, I'm sure it's in
| one of those.
| dragonwriter wrote:
| Here's discussion of the complaint based on his
| admission:
|
| https://www.cnbc.com/2022/12/08/ftx-ceo-sam-bankman-
| fried-hi...
|
| Count eight of the indictment also seems related, but its
| not a "speaking" indictment, so its not super clear.
| coolspot wrote:
| > Imagine reading a document like this with "United States
| of America v Your Name" at the top.
|
| I once contested a traffic violation and the court
| paperwork stated "People of California vs <my_name>".
| People of California have lost.
| arcticbull wrote:
| The forfeiture in rem ones are my favorite, for instance
| "United States v. Article Consisting of 50,000 Cardboard
| Boxes More or Less, Each Containing One Pair of Clacker
| Balls" [1]
|
| [1] https://en.m.wikipedia.org/wiki/United_States_v._Arti
| cle_Con...
| LatteLazy wrote:
| The best time for regulators to act would have been >1y ago
| before everyones money was lost when they were too busy going
| after Kim Kardashian.
|
| The second best time is now.
| hintymad wrote:
| Can SBF still leetcode his way into FAANG after serving his
| terms?
| pigtailgirl wrote:
| -- relevant: https://www.sec.gov/news/press-release/2018-41 --
|
| Theranos and Holmes have agreed to settle the fraud charges
| levied against them. Holmes agreed to pay a $500,000 penalty, be
| barred from serving as an officer or director of a public company
| for 10 years, return the remaining 18.9 million shares that she
| obtained during the fraud, and relinquish her voting control of
| Theranos by converting her super-majority Theranos Class B Common
| shares to Class A Common shares.
| c0m wrote:
| The SEC's complaint. It's a brutal read if you're Sam:
|
| https://www.sec.gov/litigation/complaints/2022/comp-pr2022-2...
| blitzar wrote:
| > 31. From the inception of FTX, Bankman-Fried diverted FTX
| customer funds to Alameda, and he continued to do so until
| FTX's collapse in November 2022
|
| I assume they have the evidence, and while what SBF was saying
| (we never touched customer funds etc.) was never particularly
| credible - it blows up the narative that he has maintained to
| date. Indeed much of the case is built on his public statements
| (and testimony) being false.
| lovehashbrowns wrote:
| They have SBF's own idiot mouth as evidence when he claimed,
| multiple times, that Alameda was created first, got its bank
| account, and FTX used that Alameda bank account when FTX was
| created.
|
| He alludes to it here: https://youtu.be/4o_jPzBZSIo at 11:58
| or so, where he mentions "before FTX had its own bank
| account."
|
| I know there's a longer explanation, but that's the best
| citation I can come up with off the top of my head. In the
| longer explanation, he specifically says that creating a bank
| account for a new company can be difficult, so they used
| Alameda's bank account as they waited for a bank account
| specifically for FTX.
|
| This goes specifically with point 31 in the document. Of
| course, they'll have better evidence once they go through
| discovery, but this moron has been on a self-incrimination
| tour. I'd call it a wild success!
| dboreham wrote:
| I'm just an engineer, but even I know that if you create an
| entity and expect to perform financial transactions as that
| entity, you need a bank account. Corporations, LLCs, HOAs,
| clubs, lemonade stands. Well, perhaps not lemonade
| stands... If you don't have the bank account open yet, then
| don't initiate any transactions.
|
| It stretches credulity very far to believe someone running
| a financial _institution_ did not know this.
| scotcha1 wrote:
| I think the assumption you're making is:
|
| 1) SBF cared about traditional rules of banking/finance
|
| 2) SBF cares about doing things the 'right way'
|
| He may have been doing it purposefully wrong, or he may
| have just wanted to do it as fast as possible ("Move Fast
| and Break Things") and so he skipped the requesite steps
| to get to what he wanted done, faster.
|
| Not a justification for his actions, but simply why he
| may have done it
| clintonwoo wrote:
| I read the whole thing, it's a damning account and he's never
| going to work in finance again.
| Bayko wrote:
| I highly doubt Sam needs to worry about his career prospects
| sir. But if he is would love to see solve some LC hards
| astrange wrote:
| He'd be a popular poker player since he'd always be giving
| his money away.
| [deleted]
| dereg wrote:
| This is the biggest understatement of the century.
| heurisko wrote:
| Just a few days ago, he was hoping to "make people's money
| back". [1]
|
| It's a bit sad, as he appears delusional. A less forgiving
| viewpoint would be that his background cultivated his sense of
| being untouchable; that it was just a case of having another
| go.
|
| But not as sad as the people who lost money they couldn't
| afford to lose.
|
| [1] https://www.bbc.co.uk/news/technology-63911363
| tehwebguy wrote:
| > he appears delusional
|
| Yeah, he thinks he'll look better as delusional than
| criminally greedy and apparently he's right
| dang wrote:
| Thanks - we've changed the URL from
| https://www.sec.gov/news/press-release/2022-219 to the actual
| complaint, which has more information.
| pseingatl wrote:
| Will the SEC claw back the political donations made with stolen
| funds?
| matheusmoreira wrote:
| That was fast...
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